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Not taking salary from limited company. is it ok?

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    Not taking salary from limited company. is it ok?

    Dear all,

    A quick one. I have been having a limited company but now had to go via an umbrella. So will draw my salary from umbrella but no salary from the limited company (for tax purposes as umbrella salary is already in higher tax band) Wife will continue to take her salary from the limited company. I will still be an employee of the limited company. Is it ok not to have any salary from limited company but still remain an employee of it? Are there any other implications I am missing?

    Many thanks!

    #2
    No issue with you (assuming you are a director) no longer taking a salary. I'm sure your accountant has confirmed this.

    What work is your wife doing to justify her salary whilst you are employed elsewhere? And could you prove the work she does is worth the remuneration if HMRC asked for proof?

    If you have been the sole income earner for the company previously, I'd recommend not paying your wife whilst you are employed via the Umbrella unless you can justify her salary. "Doing Admin" is not typically regarded as a good answer.

    On the flip side, the risk of HMRC actually asking for proof is pretty low.
    Last edited by Paralytic; 10 April 2021, 09:31.

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      #3
      Originally posted by Geekman View Post
      I will still be an employee of the limited company. Is it ok not to have any salary from limited company but still remain an employee of it?
      Just to double-check, are you sure that you're an employee? I.e. is there an employment contract between you and your limited company? That's unusual for a director, but it is allowed.

      If you are an employee, I believe that you have to pay yourself (at least) minimum wage; check your employment contract for more details.

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        #4
        Originally posted by Paralytic View Post
        If you have been the sole income earner for the company previously, I'd recommend not paying your wife whilst you are employed via the Umbrella unless you can justify her salary. "Doing Admin" is not typically regarded as a good answer.
        Related to my previous post, if your wife is an employee then I don't think the limited company can simply stop paying her; I assume that the company would need to make her redundant, and issue a P45. (This might involve redundancy pay, depending on the employment contract and how long she's been working there.)

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          #5
          Originally posted by hobnob View Post

          Related to my previous post, if your wife is an employee then I don't think the limited company can simply stop paying her; I assume that the company would need to make her redundant, and issue a P45. (This might involve redundancy pay, depending on the employment contract and how long she's been working there.)
          Agreed she'd need to get a P45 etc. But, the main point is: whilst the Ltd company is effectively dormant, what is she getting paid to do?

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            #6
            Originally posted by Paralytic View Post

            Agreed she'd need to get a P45 etc. But, the main point is: whilst the Ltd company is effectively dormant, what is she getting paid to do?
            She's being a tax mule for reasons unknown to the OP which is why he thinks he can carry on paying her for doing the nothingness she's been doing all along. Why understand what you are doing when you are avoiding tax hey.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

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              #7
              Originally posted by northernladuk View Post

              She's being a tax mule for reasons unknown to the OP which is why he thinks he can carry on paying her for doing the nothingness she's been doing all along. Why understand what you are doing when you are avoiding tax hey.
              I know that. You know that. I suspect even the OP knows that, but i thought i'd ask just in case.

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