half way thru year-do I pay myself any salary?

[stunews]

Hi, I've recently started contracting, and having started halfway through the financial year I am already way over the threshold for tax & NI from my previuos perm job, so If i pay myself any salary it will be subject to tax and NI. My initial thoughts are that I'm better paying myself purely dividends for the rest of the financial year..
Can anyone see any flaws in my plan??
Thank you...
newsnewbie

[SandyDown]

most of us pay ourselves through the divs to avoid PAYE

[Moscow Mule]

Assuming,

you're the director of your limited and
you've got the pre-requisite 6 months of buffer money in your personal account

don't take salary or divi's and build up some revenue in you Ltd.

[ThomasSoerensen]

Assuming,

you're the director of your limited and
you've got the pre-requisite 6 months of buffer money in your personal account

don't take salary or divi's and build up some revenue in you Ltd.

equity

[Moscow Mule]

equity

Indeed - I claim mental distress (working on a revenue report and it's my first day working in 7 weeks) and humbly request the boards indulgence...

[stunews]

Yes, I am director.
I've already earned more than £10k via PAYE from a perm position so i'm guessing paying myself a salary will just mean having to fork out for taxes and NI. From my research I've concluded that the only exception is if I want to pay into my pension, in which case I can just pay a bonus at the end of the financial year.
I will of course be putting aside an amount for tax etc..

[Cyberman]

Assuming,

you're the director of your limited and
you've got the pre-requisite 6 months of buffer money in your personal account

don't take salary or divi's and build up some revenue in you Ltd.

Absolutely. Leave the funds in your company and try to keep out of the 40% tax bracket, unless of course you are desperate for those funds. If you need those funds then look at expenditure because you are probably overspending.

[EvilWeevil]

NI is either on a periodic (for employees) or engagement (for directors) basis. So there will be no carry over from your previous employment.

You'll also have already paid income tax based on the expectation that you will carry on earning at the same rate for the whole year. So unless you've already earned £40K or so, then you'll actually be owed some tax come April time.

[stunews]

ok, so I may be owed some tax, so I have to work out which is more profitable:

1) not taking any more salary for the year and possibly getting a tax rebate, or

2) taking a minimal salary, ~£500pm, which will then save me corporation tax at ~20% on that amount..

think I'd better get my calculator out.. would anyone be able to throw down some numbers? say for example, that i've had 10k thru PAYE far this financial year and I could potentially pay myself salary for the next 4 months??