Don't sweat it, I had to ask my accountant something very similar after a mix of inside and outside contracts. I just sent him the p45 details and said how much can I pay myself to avoid paying high rate tax and what mix of salary/divi's was best.
He was in touch in an hour and sorted it.
It's Gorilla if anyones interested
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Reply to: Personal allowance Question
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Previously on "Personal allowance Question"
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Originally posted by northernladuk View PostIf you've got an accountant that won't explain the most efficient way to run your compay including salary levels you want to get a new one. This is really basic stuff.
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Originally posted by Gibson View Post
Hi.
Can this be done? I think that the accountant will act only and according to the advantages of the company and not his own. Whenever I tried to approach the one of the company I work for, his answer was not really encouraging.
So Maslins and others on this thread, and other threads have given you an idea of what can be done. You then just need to ask your accountant whether an idea, idea 1, or another idea, idea 2, would be the best for you. Your accountant then can suggest - this is the important word suggest - that another option, idea 3, will be better for you. You then as the director of your company can decide which of the 3 ideas is the best for your company.
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Originally posted by northernladuk View Post
What?? Of course it can be done. You are a director and can decide to pay you whatever you want whenever you want, including nothing if you don't want to.
If you've got an accountant that won't explain the most efficient way to run your compay including salary levels you want to get a new one. This is really basic stuff.
Gibson please explain what you men by 'not encouraging'? I'm intrigued as to the reasoning. But it's likely you should get a new one sharpish.Last edited by Lance; 14 July 2022, 08:08.
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Originally posted by Gibson View Post
Hi.
Can this be done? I think that the accountant will act only and according to the advantages of the company and not his own. Whenever I tried to approach the one of the company I work for, his answer was not really encouraging.
If you've got an accountant that won't explain the most efficient way to run your compay including salary levels you want to get a new one. This is really basic stuff.
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Originally posted by Lance View Post
short answer. Don't pay yourself a salary. Just take dividends as and when the company can afford them.
Long answer. Get your accountant to help you with the help of knowledge based on your personal circumstances.
Can this be done? I think that the accountant will act only and according to the advantages of the company and not his own. Whenever I tried to approach the one of the company I work for, his answer was not really encouraging.
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Thank you all, that really helps, and will inform my discussion with said accountant tomorrow.
northernladuk - thank you for the links, again, really helpful.
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Originally posted by Maslins View PostAs NICs work differently to income tax, we tend to suggest it often makes sense to still take the typical NIC threshold salary for the remainder of the tax year. Ie that salary will still be NIC free, even if you've earned big bucks in a salary earlier in the tax year.
Hence it's 20%/40% income tax (and no NICs) for that low salary
vs
19% CT + 8.75%/33.75% income tax (also no NICs) if you took it as dividends instead.
It will depend a bit on your circumstances though. Eg if you've earned £100k in the tax year to date, have loads of savings to survive off, then there'd be a good argument to not take a salary at all.
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This does get asked pretty regularly but oddly enough I'm having trouble finding them. A few here.
https://forums.contractoruk.com/acco...dividends.html
https://forums.contractoruk.com/acco...scal-year.html
https://forums.contractoruk.com/acco...questions.html
But as you'll see in all those and this thread the key advice is speak to your accountant. Not understanding the basics means whatever we say to you is also going to be difficult to understand and you'll end up confusing yourself.
So your accountant is your first port of call.
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Originally posted by Rik1087 View PostHi All,
I have attempted to search previous threads & Google but cannot find examples or answers. Ultimately, I do know this is one for my accountant, but just trying to find a more informed understanding if any one has been through a similar situation or to confirm whether I am just being really thick!
I am moving from a perm role to an outside contract in the upcoming month, everything is in place and just awaiting the contract to sign. My question is surrounding personal allowance which stands at £12,570, which obviously ties in with the lower salary you would pay yourself....how have you approached paying yourself for the remainder of the tax year if you have eaten up your personal allowance via a perm role and then switched to a contract mid way through a tax year?
I feel like I will get torn to shreds for this question (and probably rightly so) but I am really after examples of similar positions you guys have been in and how it impacted your pay for the remainder of the tax year.....
Long answer. Get your accountant to help you with the help of knowledge based on your personal circumstances.
Leave a comment:
-
As NICs work differently to income tax, we tend to suggest it often makes sense to still take the typical NIC threshold salary for the remainder of the tax year. Ie that salary will still be NIC free, even if you've earned big bucks in a salary earlier in the tax year.
Hence it's 20%/40% income tax (and no NICs) for that low salary
vs
19% CT + 8.75%/33.75% income tax (also no NICs) if you took it as dividends instead.
It will depend a bit on your circumstances though. Eg if you've earned £100k in the tax year to date, have loads of savings to survive off, then there'd be a good argument to not take a salary at all.
Leave a comment:
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Personal allowance Question
Hi All,
I have attempted to search previous threads & Google but cannot find examples or answers. Ultimately, I do know this is one for my accountant, but just trying to find a more informed understanding if any one has been through a similar situation or to confirm whether I am just being really thick!
I am moving from a perm role to an outside contract in the upcoming month, everything is in place and just awaiting the contract to sign. My question is surrounding personal allowance which stands at £12,570, which obviously ties in with the lower salary you would pay yourself....how have you approached paying yourself for the remainder of the tax year if you have eaten up your personal allowance via a perm role and then switched to a contract mid way through a tax year?
I feel like I will get torn to shreds for this question (and probably rightly so) but I am really after examples of similar positions you guys have been in and how it impacted your pay for the remainder of the tax year.....Tags: None
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