Is £10k the optimal 2014/15 salary when 10% dividend tax credit is factored in?

[Martin at NixonWilliams]

Unless your clients are non-directors there would not be any quarterly PAYE/NI payments - there would just be the one payment of NI in Q4.

[Andrew@Wisteria]

Yes the take home is broadly the same but the £10,000 saves you an additional £440 in CT?[/QUOTE]

But this is countered by reduced dividends, plus EE's NIC, so overall position is the same.

[Andrew@Wisteria]

Additional hassle for whom?

The client -the one's who have to pay it! :-)

[Martin at NixonWilliams]

But this is countered by reduced dividends, plus EE's NIC, so overall position is the same.

It is not the same at all - You are only considering the take home pay and not the overall picture.

We have identified that in both cases the take home pay is broadly the same.

If you take a £10,000 salary, the cost to the company is £8,000 after CT relief. In addition, you declare dividends of £28,679. The impact on the company's retained earnings is £36,679.

If you take a £7,800 salary, the cost to the company is £6,240 after CT relief. In addition, you declare dividends of £30,659. The impact on the company's retained earnings is £36,899.

The £10,000 salary therefore gives you around the same take home pay and costs the company £220 less. If this £220 is taken as a dividend, there's an additional £165 take home pay.

[Old Greg]

It is not the same at all - You are only considering the take home pay and not the overall picture.

We have identified that in both cases the take home pay is broadly the same.

If you take a £10,000 salary, the cost to the company is £8,000 after CT relief. In addition, you declare dividends of £28,679. The impact on the company's retained earnings is £36,679.

If you take a £7,800 salary, the cost to the company is £6,240 after CT relief. In addition, you declare dividends of £30,659. The impact on the company's retained earnings is £36,899.

The £10,000 salary therefore gives you around the same take home pay and costs the company £220 less. If this £220 is taken as a dividend, there's an additional £165 take home pay.

Or you do what many of us do and leave the additional £220 in the company for eventual withdrawal when winding the company up.

[Martin at NixonWilliams]

Or you do what many of us do and leave the additional £220 in the company for eventual withdrawal when winding the company up.

Which adds even more weight to my point - thank you

[Old Greg]

Which adds even more weight to my point - thank you

Or perhaps invest in a SIPP. £220 / year invested over 30 years would make a nice little present to oneself on retirement.

[jamesbrown]

The client -the one's who have to pay it! :-)

It's a competitive market

[Ticktock]

The client -the one's who have to pay it! :-)

I know we struggle with it when we have to log into our internet banking and have to click "Make payment"... So hassle. Much inconvenience. Wow.

[Andrew@Wisteria]

I know we struggle with it when we have to log into our internet banking and have to click "Make payment"... So hassle. Much inconvenience. Wow.

It's another payment / deadline to keep on top of - a lot of contractors I come across find it hard enough to keep on top of one of two. Obviously for those seasoned contractors less of an issue.