Can I mix my salary with dividends?

[Scrag Meister]

As someone said earlier in the thread, IMHO keep them separate.

I have different references for salary and expenses than for dividends so they show up differently on my statements. Easier for audit and reconciliation.

[Waldorf]

Someone on CUK (sorry, I can't remember who) thoughtfully provided a spreadsheet to generate the correct paperwork, which is what I use these days.

Is this the one?

http://www.nixonwilliams.com/page/105/Templates.htm

[psychocandy]

I dont see why you would even introduce yourself to possible hassle by combining the payments. After all, its not exactly hard to do two payments?

However, since the OP has disappeared and didnt seem to understand the paperwork, I wonder exactly what hes doing anyway....

[psychocandy]

Is this the one?

Contractor Accountant specialists UK | Accountancy Service for contractors | Interim Managers Accountancy Services UK | Take Home Pay Calculator UK.

I'm with NW and didnt know about this.

My NW contact just sends me the P+L which indicates amount available for dividend. I tell him how much and paperwork turns up in post, then I just pay the divis. Easy peasy!

[Joeman]

As someone said earlier in the thread, IMHO keep them separate.

I have different references for salary and expenses than for dividends so they show up differently on my statements. Easier for audit and reconciliation.

Does it really make much of a difference? or are we all being paranoid??
Does anyone have any actual proof that multiple monthly payments are better from a tax inspection point of view than a single payment?

Also if you go to your bank for a mortgage etc, do they consider multiple payments different from single lump sum payments? maybe they see your salary (~500) as being the regular payment, and the dividens as irregular payments, thus they dont like taking these into consideration when assessing your credit risk.
My (untested and unproven) thoughts were that if i can show to my personal bank that i have regular single payments of a few grand dropping into my account that fluctuate slightly (by a few k) then they would see me as a better risk than if i show multipe smaller payments...
Who knows eh!!??

[Joeman]

I dont see why you would even introduce yourself to possible hassle by combining the payments. After all, its not exactly hard to do two payments?

See my above post, do we have any evidence to suggest that a single payment does open you up to "possible hassle"?

if you were a permie you would get you salary, expenses and year end bonus on the same payment... whats the difference with salary, expenses and divs on same payment?

[Clare@InTouch]

Does it really make much of a difference? or are we all being paranoid??
Does anyone have any actual proof that multiple monthly payments are better from a tax inspection point of view than a single payment?

Also if you go to your bank for a mortgage etc, do they consider multiple payments different from single lump sum payments? maybe they see your salary (~500) as being the regular payment, and the dividens as irregular payments, thus they dont like taking these into consideration when assessing your credit risk.
My (untested and unproven) thoughts were that if i can show to my personal bank that i have regular single payments of a few grand dropping into my account that fluctuate slightly (by a few k) then they would see me as a better risk than if i show multipe smaller payments...
Who knows eh!!??

Having been involved in investigations, I can tell you it's a lot quicker to handle them if you can show the bank statements and clearly match individual payments to wage summaries and dividend vouchers. If you can't, you then have to provide backup schedules to show how each payment relates to a voucher or payslip plus which expenses it included. Preparing a tax return for someone who has just paid random amounts and then expects you to reconcile it at year end against a wage summary and non-existent dividend vouchers is also no fun. If your accountant includes full investigations and your tax return at no extra charge then great. If they are going to bill you for the investigation/return on the basis of how much time and effort it takes them, it's going to cost you more.

It's a lot easier for you to get into a mess that way too, as you can't clearly look back and identify payments yourself.

The mortgage company would be unlikely to be purely looking at your bank statements and lending on the basis of what you've paid in (that doesn't prove what you earn, just what you pay in which could come from numerous sources unrelated to ongoing income). They would write to your accountant and request details of your company profits, dividends and wages.

[malvolio]

See my above post, do we have any evidence to suggest that a single payment does open you up to "possible hassle"?

if you were a permie you would get you salary, expenses and year end bonus on the same payment... whats the difference with salary, expenses and divs on same payment?

You're not a permie though: you have to account for YourCo's transactions. What permies and their emplyers do is f*** all to do with this debate.

It's about risk management. If you have a PAYE inspection, and Hector sees single amounts of income appearing in your personal account, he will simply ignore your supporting paperwork and declare it all as salary and so liable to PAYE and NICs. If however you give him documentary evidence of a minuted dividend payment plus associated tax voucher and can point to a discrete matching payment in your own account that is clearly separate from your salary and expenses, he can't.

It's not much effort to do it properly. Not doing it properly can prove expensive. So do it properly. Understand?

[Ignis Fatuus]

See my above post, do we have any evidence to suggest that a single payment does open you up to "possible hassle"?

if you were a permie you would get you salary, expenses and year end bonus on the same payment... whats the difference with salary, expenses and divs on same payment?

A major difference is that the permie receives all of these in the same capacity, that of salaried employee. You receive those sums in quite different capacities: salary as employee/director, and dividends as shareholder.

If you were employed by say Barclays, and happened to hold some Barclays shares, you wouldn't expect your share dividend to be paid in your salary, would you?

[Joeman]

You're not a permie though: you have to account for YourCo's transactions. What permies and their emplyers do is f*** all to do with this debate.

It's about risk management. If you have a PAYE inspection, and Hector sees single amounts of income appearing in your personal account, he will simply ignore your supporting paperwork and declare it all as salary and so liable to PAYE and NICs.

Got any actual documented proof of this? or are we all just assuming this is what would happen??

If however you give him documentary evidence of a minuted dividend payment plus associated tax voucher and can point to a discrete matching payment in your own account that is clearly separate from your salary and expenses, he can't.

I'm not suggesting doing it without the supporting paperwork - of course you need all the vouchers etc to explain the figures, but once you have all the supporting paperwork, is there really anything stopping you summing it all up and paying in one payment?? do we have proof that this increases risk or are you just making that assumption??

Afterall, the director is meant to act with the best interest of the company, so if you had a bank account that charges per transaction, its in the interest of your company to make one payment not three.

not having a go, just looking for proof that one payment is riskier than multiple.