Salary from end of June until April 2012

[psychocandy]

Please be patient I'm new to this and have not found the exact answer I'm after elsewhere on the forum.
I have just set up my own Ltd company I have set up PAYE, Flat rate VAT, Corp Tax and I'm using freeagent for my accounting.
The plan is, at the end of June when the first invoices have been paid to the company, to pay myself a small salary and dividends.
Others on the forum say they pay themselves approx £589 per month x 12 = £7068 to cover NI. But I'm only starting to pay myself at the end of June. So therefore can I divide £7068 by 10 months (is that the correct amount of months to the end of the financial year). So I pay myself £706.80 per month until April 2012?
I have been unemployed from Feb 2011 until the end of May when I started the company.

Thanks

I'm in a similar position except I had a PILON payment of £15K from my last employer in April.

My accountant did initially tell me to pay myself £590 a month, until I told him about this.

I guess because my earnings are already above the no tax limit for this year, then I'd pay both tax and NI on any salary I paid myself? Right?

Although, if I paid myself £590, would I just pay tax but no NI (because its below weekly limit)?

I guess theres no point doing this though since personal would be same as CT, since I might as well just pay myself dividents (which is what accountant has recommende).

[Taxless]

I'm in a similar position except I had a PILON payment of £15K from my last employer in April.

My accountant did initially tell me to pay myself £590 a month, until I told him about this.

I guess because my earnings are already above the no tax limit for this year, then I'd pay both tax and NI on any salary I paid myself? Right?

Although, if I paid myself £590, would I just pay tax but no NI (because its below weekly limit)?

I guess theres no point doing this though since personal would be same as CT, since I might as well just pay myself dividents (which is what accountant has recommende).

Yes, directors NIC is different, because under normal rules, they have power to decide when to take salary and thus, when and how to incur nic. The hmrc guidance is here :

http://www.hmrc.gov.uk/nitables/ca44.pdf

You have a new employment, so PAYE is based on annual income, but NIC is based on the new employment, so chance to minimise income and restrict NIC exposure.

"I guess there's no point doing this though since personal would be same as CT, since I might as well just pay myself dividends".

Depends on what income you need out of the company and what the company's marginal tax rate will be, but generally, yes it's neutral.

aAsk your accountant.

[psychocandy]

Yes, directors NIC is different, because under normal rules, they have power to decide when to take salary and thus, when and how to incur nic. The hmrc guidance is here :

http://www.hmrc.gov.uk/nitables/ca44.pdf

You have a new employment, so PAYE is based on annual income, but NIC is based on the new employment, so chance to minimise income and restrict NIC exposure.

"I guess there's no point doing this though since personal would be same as CT, since I might as well just pay myself dividends".

Depends on what income you need out of the company and what the company's marginal tax rate will be, but generally, yes it's neutral.

aAsk your accountant.

This is what my accountant has suggested. Because I've already used up my allowances, then there's no gain to be had in salary.

Like you said, if I kept the weekly amount below the level, I wouldnt pay NI, but would pay normal tax. Whereas if paid it out in dividends I'd pay same rate in CT.

Is this right? Yeh, I know my accountant says this but I like to understand myself.

[Taxless]

This is what my accountant has suggested. Because I've already used up my allowances, then there's no gain to be had in salary.

Like you said, if I kept the weekly amount below the level, I wouldnt pay NI, but would pay normal tax. Whereas if paid it out in dividends I'd pay same rate in CT.

Is this right? Yeh, I know my accountant says this but I like to understand myself.

Yes, unless the company had profits over £300k when higher rates apply for CT, but I am guessing this is unlikely!

You also have a slight cash flow advantage as any PAYE would be paid monthly as you go, whereas the CT is not paid until 9 months after the end of the company's accounting period.

[jamesc77]

I know you are new to this but I note you're straight in there talking about low salary and dividends, but no mention of IR35, just a thought !!

Robot

Thanks for all the help. Looks like I'm looking for an accountant