Can I continue to take a salary ?

[BolshieBastard]

Taking divis is an easy answer - yes. What about salary though - is a company allowed to pay you a salary when you're not actually working? Some people try to hire their spouse and pay them a salary for token work but this is not allowed IIRC, in fact didn't an MP get slammed for hiring their son on £20k to basically do nothing?

Pretty amazing that someone with over 13,000 posts should put forward this supposition!

[northernladuk]

Pretty amazing that someone with over 13,000 posts should put forward this supposition!

To be fair he has a point which I initially missed. I didn't read it and assumed not working in between gigs. Being unavailable to work provides a different issue so I don't know.

[Nixon Williams]

Thanks all.. I do intend to work, but not now, after a year. So, until then, can i still take a salary obviously without touching the CT and VAT?

On the facts you have provided, you can take a salary, I assume that you mean a tax efficient one? You do need to consider the Maternity Pay issue though and you should discuss this with your accountant asap - failure to do so could cost you several thousand pounds.

The money set aside for VAT & Corporation Tax is not yours to touch, do not make the mistake of using this money.

Alan

[Bumble79]

On the facts you have provided, you can take a salary, I assume that you mean a tax efficient one? You do need to consider the Maternity Pay issue though and you should discuss this with your accountant asap - failure to do so could cost you several thousand pounds.

The money set aside for VAT & Corporation Tax is not yours to touch, do not make the mistake of using this money.

Alan

Thanks Alan. Yes a tax efficient one. Obviously, I will not be touching the VAT and Corporation Tax amount. Have gotten in touch with my accountant. When you say, it could cost several thousand pounds, what exactly are you referring to ?

[northernladuk]

You mentioned taking dividends so I assume you have profit in the bank. Why not take them all in one go (after doing your sums to keep it most efficient) and put it somewhere where it will earn some interest? There is no need to keep it in the bank and take it monthly or anything.

[Nixon Williams]

Thanks Alan. When you say, it could cost several thousand pounds, what exactly are you referring to ?

Maternity Pay may be claimable (it depends on how long you have been an employee etc), the current rate is £135.45 per week (maybe less is the salary was not at the normal tax efficient rate) for upto 39 weeks, so over £5K !

Alan

[Bumble79]

You mentioned taking dividends so I assume you have profit in the bank. Why not take them all in one go (after doing your sums to keep it most efficient) and put it somewhere where it will earn some interest? There is no need to keep it in the bank and take it monthly or anything.

Yes , have profits, will do so soon.

[mickael28]

You mentioned taking dividends so I assume you have profit in the bank. Why not take them all in one go (after doing your sums to keep it most efficient) and put it somewhere where it will earn some interest? There is no need to keep it in the bank and take it monthly or anything.

Can you voluntarily stop working (so I suppose you shouldn't get a salary) and keep getting dividends every year from the profit retained in the company since you started contracting, ie, kind of using the company as a pension until the money runs out?

[NotAllThere]

Thanks Alan. Yes a tax efficient one. Obviously, I will not be touching the VAT and Corporation Tax amount. Have gotten in touch with my accountant. When you say, it could cost several thousand pounds, what exactly are you referring to ?

Paying salary will, however, reduce the amount of corp tax due, as it is a company expense.

[northernladuk]

Can you voluntarily stop working (so I suppose you shouldn't get a salary) and keep getting dividends every year from the profit retained in the company since you started contracting, ie, kind of using the company as a pension until the money runs out?

Of course. It is profit so it has to come out somehow. It doesn't make sense to keep it in the company bank if you don't need to though as it attracts no interest. Take out the max you can a year to keep under the tax threshold in a lump sum at the beginning of the year and personally re-invest it. I take a single one at the beginning of the year now and put it in to an account earning some interest and just withdraw what I need monthly. If you can take 32K a year divis it makes no sense paying yourself 2.6k a month when you don't need to. You can pay any dividend amount you want as long as your paperwork reflects this.