On the bench - JSA, salary etc

[lithium147]

The commercial implication is:
If you have been contracting for a few years, and you have not been taking dividends which incur the extra 25% tax, you will likely have alot of money in your business account.
This money is much more useful in your personal account where you can earn more interest or invest in property etc.
Therefore, at the 6th april each, you can take alot of money out of your business accounts in one lump sum:
- PAYE ~ £7K
- Dividends ~ £32K
- Dividends for partner ~ £32K
- Directors loan ~ £5K (or more if you dont mind paying interest)

Its also much less paper work, as you dont need to do regular dividend meeting minutes. Also, less worrying about how much to take out each month.

[psychocandy]

Regarding PAYE:
if you paid all the company monies out as dividends + PAYE, and have not enough to use up your remaining tax free allowance, your previous dividend payments can be re-attributed as PAYE payments or director loan payments. Therefore, you can make sure your allowance is fully utilised (for this year only).

Actually, as a director, you dont have to pay yourself a monthly salary. You could actually, pay yourself a year salary.

I am planning (with my accountants approval) to pay myself on 6th april 2013 a full years salary in advance for 2013/2014.

Are you sure about this?

[stek]

The commercial implication is:
If you have been contracting for a few years, and you have not been taking dividends which incur the extra 25% tax, you will likely have alot of money in your business account.
This money is much more useful in your personal account where you can earn more interest or invest in property etc.
Therefore, at the 6th april each, you can take alot of money out of your business accounts in one lump sum:
- PAYE ~ £7K
- Dividends ~ £32K
- Dividends for spouse ~ £32K
- Directors loan ~ £5K (or more if you dont mind paying interest)

Its also much less paper work, as you dont need to do regular dividend meeting minutes. Also, less worrying about how much to take out each month.

FTFY

[psychocandy]

OK. My accountant has explained it all. Top job by them as per usual. (Danny at Nixon Williams)

Yes. You need a P45 to claim JSA.
Yes. You'd have to stop paying salary.
Yes. You can catch up salary later if it suits (so you still get to £7K for the year).
Also, if needs be you can cancel dividend or loan the company personal money to pay the salary if you want.

[northernladuk]

OK. My accountant has explained it all. Top job by them as per usual. (Danny at Nixon Williams)

Yes. You need a P45 to claim JSA.
Yes. You'd have to stop paying salary.
Yes. You can catch up salary later if it suits (so you still get to £7K for the year).
Also, if needs be you can cancel dividend or loan the company personal money to pay the salary if you want.

Shame you didn't ask them first hey......

[Scoobos]

But NLUK, how can you search for stuff in threads, if they aren't made in the first place?

[northernladuk]

But NLUK, how can you search for stuff in threads, if they aren't made in the first place?

You don't search the threads, you ask a professional who you pay or you go research it on the web. Millions of scroats can get on to benefits ok but Psychobabble has to use a 5 page thread before he asks the right person. It's just ridiculous.

If you found out that your accountant or any other business asks questions on a board without doing any basic research first would you spend your money with them?

[Scoobos]

Because this forum is here to help people who are trying to research being a contractor, among other things.

What would be the point in the forum if everyone just pays for pro advice instead of using it...

Anyhoo <off me soapbox>