Billing with no payroll, but get dividends

[Fred Bloggs]

Hi,
sorry for the late reply and thanks all for your responses. I wanted to do my reading and have better understanding before provide an answer.

I've found information in HMRC that specify that I could use the personal allowance for dividends, so that topic looks good.

I don't have any other incomes or salary.

I don't think I need a PAYE scheme if I don't pay a salary myself, am I right?. For the EPS (Employer Payment Summary) can I just inform HMRC that I won't pay any employees anymore and avoid the EPS monthly submission? do I really need to submit an EPS if I'm not running a payroll at all?

Regards.

If you do not register the company for payroll with HMRC (my side hustle Ltd company, for example) then there is nothing to report.

[iandres]

More info is needed on this but yes you can pay dividends to yourself and not have a salary from your company. However, as others have mentioned, what other income do you have aside from your company? From income and tax point of view, we'd all need a bit more information from you to give you general advice. If you have a PAYE scheme set up in your company and you don't pay yourself a salary, you'll still need to submit an EPS each month through RTI. If you have a salary from elsewhere, how much is it? That would determine whether it's worth while putting through a salary from your company or just taking a dividend. Do you need the money from your company?

Hi,
sorry for the late reply and thanks all for your responses. I wanted to do my reading and have better understanding before provide an answer.

I've found information in HMRC that specify that I could use the personal allowance for dividends, so that topic looks good.

I don't have any other incomes or salary.

I don't think I need a PAYE scheme if I don't pay a salary myself, am I right?. For the EPS (Employer Payment Summary) can I just inform HMRC that I won't pay any employees anymore and avoid the EPS monthly submission? do I really need to submit an EPS if I'm not running a payroll at all?

Regards.

[Craig@Clarity]

Hi,

I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

Regards.

More info is needed on this but yes you can pay dividends to yourself and not have a salary from your company. However, as others have mentioned, what other income do you have aside from your company? From income and tax point of view, we'd all need a bit more information from you to give you general advice. If you have a PAYE scheme set up in your company and you don't pay yourself a salary, you'll still need to submit an EPS each month through RTI. If you have a salary from elsewhere, how much is it? That would determine whether it's worth while putting through a salary from your company or just taking a dividend. Do you need the money from your company?

[northernladuk]

Dividends will also use your personal allowance as well (if you dont have a salary).

I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.

You think?

[SimonMac]

I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.

Bingo!

There is also the added bonus of having your NI stamp counted even if you earn below the threshold

[hobnob]

According to Crunch:
"There may also be occasions where you decide not to pay yourself a salary during any given month, such as if you’ve taken a PAYE job. However, you still need to make sure you remain compliant with HMRC's Real-time information (RTI) regulations. Not making a submission on a monthly basis will incur penalties from HMRC."
What happens if I don't perform a payroll run every month? | Crunch
Real Time Information: improving the operation of Pay As You Earn - GOV.UK (www.gov.uk)

I.e. there's a distinction between having a nil payroll and not having a payroll at all.

[Fraidycat]

Payroll means you can take advantage of the personal allowance and reduce your tax liability.

Dividends will also use your personal allowance as well (if you dont have a salary).

I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.

[Fred Bloggs]

On the assumption this is a side hustle so you have salary. No you don't need payroll. My last two Ltd Co's have not run payroll.

[SimonMac]

Hi,

I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

Regards.

Do you have any other income? If not running a payroll will mean you can use your full £12,700 a year tax allowance

[BlasterBates]

Payroll means you can take advantage of the personal allowance and reduce your tax liability.

[northernladuk]

Did you ask your accountant? They should be able to advise the most tax efficient way of getting your money out of your LTD. It's usually low salary to the threshold and then dividends.

If you are confused then ask them.

[iandres]

Hi,

I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

Regards.