Rate rise but still take home same amount

[TykeMerc]

In pure financial terms yes, if you're dead set on best tax efficiency.

There are however other benefits (and risks) to contracting as a career path, I get a good deal more out of working the way I do than just the money side.

[Brussels Slumdog]

I got a £65 rate rise with my contract extension - but am still paying myself the same income as I was before the rise. To make my business tax efficient, I take a minimal salary and a tax-free dividend. My accountant tells me that if I take a larger dividend, I will be paying 25% tax on it.

To be tax efficient, am I correct in saying a contractor on a day rate of 400 will be taking home the same as a contractor on 1000?

On 450 day I stayed at the Premier Inn at 480 at the Holiday inn. At 1000 day I would hire a helicopter to take me to work.

[SpontaneousOrder]

I don't get this thread.

[heyya99]

On 450 day I stayed at the Premier Inn at 480 at the Holiday inn. At 1000 day I would hire a helicopter to take me to work.

That's not very tax-efficient.

[kal]

That's not very tax-efficient.

Whoosh!!!

[TheFaQQer]

Contracting seems to be a good gig for long term planning.

Until the market takes a dive and you can't find a contract for six months. Unless you planned for that, of course.

[psychocandy]

Fair enough, my question was pretty basic but my aim was to find out how I can get more funds out of my company without incurring high tax. I already pay a high pension and do not have a partner so looks like I am doing the most I can.

I have spoken to my accountant on this issue but getting a second opinion is valuable.

Are you married? If so, does wife have own income or low income? splitting dividends may be an option but speak to your accountant.

Apart from that no I dont think so. Of course, you dont have to pay the money out to yourself personally - you can pay into pensiuon, or just keep in the company.

[psychocandy]

The reason for my thread is that I've been contracting about 2 years now and I'm trying to reflect on the success of it, whether it's worth doing long term or if I should return to perm.

2 years !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!

And you still dont understand dividends/tax bands etc.

[psychocandy]

Contracting seems to be a good gig for long term planning. I realistically am not going to see the big benefit until I close my company and take the cash.

Yes but if you take £100K out of the company (be it dividends/salary) or earn £100K as permie you're still going to be in upper tax bracket and pay tax accordingly.

[heyya99]

2 years !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!

And you still dont understand dividends/tax bands etc.

State which parts indicates I don't understand dividends/tax bands etc? No one on here has contradicted what I have said.