Drawing dividends over higher tax threshold - should I?

[MrRobin]

But your company would be still paying you after you 'retire' meaning you're still employed?

I think he means keep the payments coming but not have to work to generate revenue for your ltd because there is such a surplus in there already.

PLUS, get some corp tax rebate too

[MrRobin]

You should be able to get this done for much lower than this, we are in the process of setting up a fixed cost for our clients of £3500+VAT

Most contractor companies should be easier to process than other companies.

Alan

Thanks for the info, Alan. Still seems quite a lot but I don't actually know how much work is involved.

A step in the right direction, at least.

[Joeman]

do your final accounts, pay everyone you need to, and abandon the company.. once you dont file returns, companies house strike it off the list.

been there, dont that

[Nixon Williams]

Thanks for the info, Alan. Still seems quite a lot but I don't actually know how much work is involved.

A step in the right direction, at least.

It is a lot, I agree, this work must be completed by a licensed insolvency practitioner and would need to be someone independent of your accountant, so this fee would not be payable to ourselves but to the insolvency specialist.

This is not a job you can do on your own, so you need to way up whether this extra cost is more than covered by the tax savings it will generate.

For the hassle factor and tax savings, the retained profits would need to be in excess of £40-50,000 to make it worth doing.

Alan

[THEPUMA]

I think the "accumulate funds in company as cashflow permits, invest in whatever you like, retire, draw down dividends to H&W up to higher rate tax threshold each year until accumulated monies are extinguished" strategy has a lot going for it.

PUMA

[kingcook]

But your company would be still paying you after you 'retire' meaning you're still employed?

Correct. Your ltd co pays you for doing nothing. At least it sounds good to me.

[d000hg]

Correct. Your ltd co pays you for doing nothing. At least it sounds good to me.

Unless there are benefits to being unemployed.

[kingcook]

Unless there are benefits to being unemployed.

Without doing the math, i'd say that paying yourself a salary + dividends (without going into the higher tax rate) pays more than Job Seekers Allowance of £65/wk (and of course you actually have to be looking for a job to claim that).

There may be other benefits to claim, not sure.

Of course it all depends on how much £££ you have stashed away in your business' bank account and other personal circumstances.

[smalldog]

Without doing the math, i'd say that paying yourself a salary + dividends (without going into the higher tax rate) pays more than Job Seekers Allowance of £65/wk (and of course you actually have to be looking for a job to claim that).

There may be other benefits to claim, not sure.

Of course it all depends on how much £££ you have stashed away in your business' bank account and other personal circumstances.

Trouble is company money is eroded over time and becomes worth less and less due to inflation and the crap interest rates you get on business bank accounts and investments.

IMHO take it out, take the 25% hit and invest it in a mix of low and higher risk products, IMHO there is nothing to be gained in leaving it in the business, sure leave a buffer for safety but until such time as bank offer businesses a reasonable array of investment options you will make more and cover your 25% uplift over the years if you take it personal.

There is another option, if you have cash swilling around, get the company to purchase a Buy to let property and overpay the mortgage, thats what im doing. Depending on where you buy it will outstrip inflation, give you a good investment, will enable you to reduce your company profits and subsequent CT due to it will being a debt repayment and prevent you gettingt hit with a 25% uplift in div tax.

[kingcook]

Trouble is company money is eroded over time and becomes worth less and less due to inflation and the crap interest rates you get on business bank accounts and investments.

IMHO take it out, take the 25% hit and invest it in a mix of low and higher risk products, IMHO there is nothing to be gained in leaving it in the business, sure leave a buffer for safety but until such time as bank offer businesses a reasonable array of investment options you will make more and cover your 25% uplift over the years if you take it personal.

There is another option, if you have cash swilling around, get the company to purchase a Buy to let property and overpay the mortgage, thats what im doing. Depending on where you buy it will outstrip inflation, give you a good investment, will enable you to reduce your company profits and subsequent CT due to it will being a debt repayment and prevent you gettingt hit with a 25% uplift in div tax.

If you invest in a high interest account (2.5% whoop whoop), that's a good way of keeping the money in the business account.

IMO taking a 25% hit on day 1 is not a wise move. High risk = bad (my personal opinion). Low risk = small gains, not enough to recoup the 25% hit one just took

I can quite happily live on a wage that is < higher tax band (for now).