How to manage the money in the Company in periods of inactivity ?

[dude69]

Not quite - up to the point when any retained profits have been exhausted for dividend payments, and as long as you can afford it for salary. Don't forget a director has a legal duty not to trade an insolvent company, so you have to leave sufficient working capital for the usual bills and stuff like CT and VAT payments

There wouldn't be any CT and VAT because the company would not be earning anything. Although CT liability does hangover for a long time after the income was earned (up to 21 months later).

But strictly speaking, there are no ongoing taxes other than the Companies House return every year (which costs about £20), and potentially employer's NI.

[malvolio]

He can still pay out retained income from previous periods.

I would continue to pay out £5k salary, £30k/yr dividends, even if the company was not earning any income, up to the point there was no money left in the company.

Not quite - up to the point when any retained profits have been exhausted for dividend payments, and as long as you can afford it for salary. Don't forget a director has a legal duty not to trade an insolvent company, so you have to leave sufficient working capital for the usual bills and stuff like CT and VAT payments

[dude69]

You should keep paying your salary, as long as you can. After all, it's a salary. But as you're operating at a loss, you shouldn't really be paying dividends at all.

He can still pay out retained income from previous periods.

I would continue to pay out £5k salary, £30k/yr dividends, even if the company was not earning any income, up to the point there was no money left in the company.

[pisces]

Maybe start a new company for the new contract and close the current one?

[2uk]

There speaks a brave man. Foolish and misguided, but brave...

Believe me , here you can get very good advice , be it "Ask your accountant" , which I normally do , but is awesome to have a second opinion.

[malvolio]

I trust no one but CUK

There speaks a brave man. Foolish and misguided, but brave...

[2uk]

I think you need an accountant. These are basics...

For example, the point of low salary/high divis is that you keep out of higher rate as long as possible. Or hadn't you twigged how that works yet?

I trust no one but CUK

[malvolio]

Does this mean paying 900 monthly salary is always most tax efficiant regardless you are high/low tax payer ?

I think you need an accountant. These are basics...

For example, the point of low salary/high divis is that you keep out of higher rate as long as possible. Or hadn't you twigged how that works yet?

[2uk]

You should keep paying your salary, as long as you can. After all, it's a salary. But as you're operating at a loss, you shouldn't really be paying dividends at all.

Don't spend the tax money.

Does this mean paying 900 monthly salary is always most tax efficiant regardless you are high/low tax payer ?

[VectraMan]

You should keep paying your salary, as long as you can. After all, it's a salary. But as you're operating at a loss, you shouldn't really be paying dividends at all.

Don't spend the tax money.

[2uk]

I am having next contract working for another IT company. What should I do with the money in my Company during the 3 months I am not brining any money in. ?

1. Should I draw the accumulated dividend and not pay myself PAYE during these 3 months ? аBout 5k - , the rest of the money is corp tax money .

2. Tax wise , Should I keep paying my self – PAYE salary of 900 although no money will be coming in ? However, If I draw the 5 k in dividends , I will be paying my salary from tax money !