How much to pay oneself through Ltd Company ?

[teabag]

I think that paying oneself minimum wage and taking the rest as dividends is taking the p*ss somewhat and may well mark a company out for investigation.

What would be a prudent figure to pay oneself as a director ? Average national wage ? More / less ? What does everybody pay oneself?

[Denny]

Most contractors on here take the piss because they are clearly inside IR35 but still claim as if they're outside. They spend far more time 'studying the form' horse betting style of being IR investigated than spending time ensuring that their tax affairs are accurate. Most conclude that an investigation is unlikely, but niaively believe that taking out insurance against an investigation will see them alright should Gordo come 'a knocking. Most of these contractors should have company names like 'Cuckooland Limited' or 'Head-in-the-sand Limited.' The are easily recognisable because they refer to EBs as agencies, believe that those who do 'add value' (which most thankfully recognise as being rare) 'find them a job' or else they refer to their business negotiations as 'interviews' and send 'CVs' off to the agency.'

I would say less than 10 per cent on here are truly outside IR35 with marketing literature, good direct clients they can use between EB contracts, rights of substitution in practice and on paper, outside client control by working as and how and where they like with the fee that is meant to reflect meeting client deadlines rather than being paid for their time (on site). The proof the the pudding are those topics raised about what a contractor should say to their current client when other work comes their way. For real businesses, truly operating outside IR35, this is as relevant or as worrying as asking your clients permission to blow your nose. Most businesses, in case, you didn't know do work for multiple clients simultaneously, in case you didn't realise.

The majority on here are pseudo IT employees with a stitched up IR35 friendly contract looked over by Bauer and Cotterall or Qudos who take a fee for old rope (because they don't actually know what working conditions will be like on site). Therefore, most contractors are working on site, full time under client control for a contracted period, just like any other fixed term employee, moan about putting in extra hours for no pay, are paid a daily or hourly fee in leiu of pension, holidays etc for their time not their work. They should be paying tax on most of their income, minus 5% not just a proportion of it.

My accountant suggests that at least £6000 should be paid as salary, however, bear in mind that your dividend payouts would also be quite small (£2000 per quarter) to avoid higher tax rates than you would otherwise attract. Therefore, if you want to take a large dividend, make sure you pay yourself a proportionate salary to reflect this.

[Ivor1]

Most contractors on here take the piss because they are clearly inside IR35 but still claim as if they're outside. They spend far more time 'studying the form' horse betting style of being IR investigated than spending time ensuring that their tax affairs are accurate. Most conclude that an investigation is unlikely, but niaively believe that taking out insurance against an investigation will see them alright should Gordo come 'a knocking. Most of these contractors should have company names like 'Cuckooland Limited' or 'Head-in-the-sand Limited.' The are easily recognisable because they refer to EBs as agencies, believe that those who do 'add value' (which most thankfully recognise as being rare) 'find them a job' or else they refer to their business negotiations as 'interviews' and send 'CVs' off to the agency.'

I would say less than 10 per cent on here are truly outside IR35 with marketing literature, good direct clients they can use between EB contracts, rights of substitution in practice and on paper, outside client control by working as and how and where they like with the fee that is meant to reflect meeting client deadlines rather than being paid for their time (on site). The proof the the pudding are those topics raised about what a contractor should say to their current client when other work comes their way. For real businesses, truly operating outside IR35, this is as relevant or as worrying as asking your clients permission to blow your nose. Most businesses, in case, you didn't know do work for multiple clients simultaneously, in case you didn't realise.

The majority on here are pseudo IT employees with a stitched up IR35 friendly contract looked over by Bauer and Cotterall or Qudos who take a fee for old rope (because they don't actually know what working conditions will be like on site). Therefore, most contractors are working on site, full time under client control for a contracted period, just like any other fixed term employee, moan about putting in extra hours for no pay, are paid a daily or hourly fee in leiu of pension, holidays etc for their time not their work. They should be paying tax on most of their income, minus 5% not just a proportion of it.

My accountant suggests that at least £6000 should be paid as salary, however, bear in mind that your dividend payouts would also be quite small (£2000 per quarter) to avoid higher tax rates than you would otherwise attract. Therefore, if you want to take a large dividend, make sure you pay yourself a proportionate salary to reflect this.

You sound like a fun guy

[Dundeegeorge]

If your terms and conditions

mean that you're outside IR35, then pay yourself as little salary as you want to.
Ignore the morons who whine that paying a small salary opens you up to investigation, there's an anglo-saxon word which describes that kind of talk.
Your accountant should advise you on the most tax-efficient way to run your company's finances, and if you're paying him, you ought to listen to his advice at least.
If you're not a member of the PCG you should go and have a look see, insurance is included in the fee, and there's lots of good stuff on the forums (fora?) relating legal issues and just the sort of query you've raised..
Also (and the longer you post in here the more you'll appreciate it) because you have to pay for it you don't generally get burger flippers and agents peddling their nonsense all over the forums.

[boredsenseless]

Ultimately you are paying an accountant to advise you on the best thing to do with your money.

I'd take his advice before Denny's or Dundeegeorge's or mine if I was you.

However it is good to be enlightened yourself in case your accountant is pants!

The answer is simple the law allows a director of a company to pay themselves whatever they like (this isn't even subject to the funds being available, however if you are negligent the receivers could sue you later!). Any profit remaining can be distributed by way of dividends or retained for investment in the company. (Obvioulsy HMRC get their cut before this)

I would always argue leaving the money in the company, drawing dividends as and when the balance of retained profits exceeds a given figure (I set this at the amount I'd need to live for a year if no work came in). Hence if I have more than that in the company it is in my mind truly surplus to the operating overheads of the company and can be distributed.

Contrary to what most people think investigations are either purley random, or triggered by absent paperwork (such as returns, accounts etc) or mistakes in these or you PAYE/VAT.

The reason people believe it is more related to those claiming no salary and high dividends is because there are a lot doing it this way compared with the alternatives and also a lot of contractors don't take the time to be on top of the requirements of running a company and so make mistakes.

That said in the course of your life as a contractor you will more than likely be investigated in some way, thats life if you earn a big wedge nowadays

[Emperor Dalek]

You sound like a fun guy

Never a truer word spoken in jest!

[Paddy]

I think that paying oneself minimum wage and taking the rest as dividends is taking the p*ss somewhat and may well mark a company out for investigation.

What would be a prudent figure to pay oneself as a director ? Average national wage ? More / less ? What does everybody pay oneself?

I am really struggling to pay myself anything these days. By the time I’ve paid the offshore consultancy company, and by the time I’ve paid the offshore advisory company there is very little left.

[lilelvis2000]

For the first couple of years isn't it alright to pay yourself very little? I mean you have a fledgling "business" don't you?

Perhaps after a few years you may want to pay a reasonable salary - I'm in the £9,000 pa area now.

[Jay54]

I am really struggling to pay myself anything these days. By the time I’ve paid the offshore consultancy company, and by the time I’ve paid the offshore advisory company there is very little left.

Are you MAD or just taking the p***? dont you know going offshore is like holding up a red flag to IR saying come and get me cos its not the offshore company that gets the bill when IR35 comes a knocking at your door, it will be you who pays. How do you feel now?

[Mark Crossan]

I know contracgtors who are not being paid anything other than divi's which is really taking the p***. If you are earning the income of your company then you shoud be paid for that.