Salary/Income?

[325i]

As with most contractors, I take minimum salary (7k) and the rest via dividends.

Question is, if I get asked my salary, do I declare 7k or is it the full amount inc dividends?

Thanks

[malvolio]

As with most contractors, I take minimum salary (7k) and the rest via dividends.

Question is, if I get asked my salary, do I declare 7k or is it the full amount inc dividends?

Thanks

That rather depends who's asking and why, but most will be looking for your annual income.

[northernladuk]

As with most contractors, I take minimum salary (7k) and the rest via dividends.

Question is, if I get asked my salary, do I declare 7k or is it the full amount inc dividends?

Thanks

The clue is in the question. If they ask you what you salary is it's 7k. If they ask you what your income is it is salary + dividends. If someone does ask for your salary make a point of explaining your situation. They may be phrasing the question wrong or not understand how we work.

+1 to what Mal says as well. Depends on what you are applying for.

[GB9]

As with most contractors, I take minimum salary (7k) and the rest via dividends

I fundamentally disagree with this. I dont believe most do. Maybe one or two of our esteemed accountants could give an insight?

[Old Greg]

I fundamentally disagree with this. I dont believe most do. Maybe one or two of our esteemed accountants could give an insight?

Why would you take <£9440(?) in salary (the personal allowance) and instead pay CT on the money?

[GB9]

Why would you take <£9440(?) in salary (the personal allowance) and instead pay CT on the money?

I have always taken a larger salary as PAYE and then paid dividends from what was left. Most people I know do the same. (Not all).

And yes, I know it isn't the most tax efficient way.

[TheCyclingProgrammer]

Why would you take <£9440(?) in salary (the personal allowance) and instead pay CT on the money?

Because once you add NIC, you end up paying more tax if you pay your full allowance as salary.

The optimal salary for 2013/14 is £646 a month, about £7.5k, which gives you a qualifying year for NIC purposes.

Details here:

http://www.3caonline.com/as-a-direct...elf-in-201314/

But by all means take your entire allowance as salary and pay more tax than strictly necessary.

Personally I don't understand why you'd want to pay more tax than you need to, but to each their own.

[Jessica@WhiteFieldTax]

I fundamentally disagree with this. I dont believe most do. Maybe one or two of our esteemed accountants could give an insight?

As none of them have replied, I'll have to do.

Across c300-350 PSCs, the %s are roughly 90% take a salary at our suggested level, £12k, and the rest as dividend. Of the other 10% it splits evenly between (a) declaring inside IR35 (b) higher salary / lowe dividend and (c) PA level salary and rest as divi.

[Jessica@WhiteFieldTax]

As regards OP, context is everything. Depends who is asking and circumstances, important thing is to be transparent. Eg declaring to CSA that you only earn 7k is unethical.

[TheCyclingProgrammer]

One useful scenario where salary counts and dividends do not is when calculating how much YourCo is entitled to pay in terms of child care (either directly or using vouchers).