Reply to: What do rich people do?

[SueEllen]

That's one avenue we would certainly go down. My wife is currently working part-time BUT if my/our Plan B takes off she would genuinely need to get involved. Is it feasible to pay someone around £35k though for no more than part time work?

Depends on what the role involves.

You have to remember there are directors of large companies who are part-time as they have many directorships who get paid in the hundreds of thousands for each directorship.

[Gaz_M]

In your case if you had your wife (with req. qual/exp. & provided she's not employed already), who can be appointed as a Secretary to your Company, this way the company can provide for salary to your wife again upt the 35K+ mark, this way save on both sides

That's one avenue we would certainly go down. My wife is currently working part-time BUT if my/our Plan B takes off she would genuinely need to get involved. Is it feasible to pay someone around £35k though for no more than part time work?

Id guess they pay the extra tax to withdraw the dividends.

This is where I get confused. One reason I only pay myself around 40k is that you have to pay tax on any extra divs for the tax year just completed but also pay the same amount towards the next year. So in real terms if you take say £10k extra out in divs you quite rightly pay around £2500 of that in tax but also £2500 towards next year’s bill. Therefore, in reality you only get to see around £5k of the extra 10 you paid yourself.
So, if you pay yourself around £30k extra would you pay approx 25% (£7500) for this year & 25% (£15k in total) towards the next etc etc?

[escapeUK]

A question I have always wondered about too but I think setting the turnover at £1m+ profit has turned the thread into irrelevant answers for contractors.

I've just set out on my 'Plan B' & if it takes off like I hope, within 3 or 4 years I would have a company turning over at least £100k and more likely £150k+. At the moment my company turns over around £75k as a contractor & I pay myself around the £40k+ mark to avoid extra tax BUT if Plan B works then I'd certainly want to get my hands on more of the company cash. I've also wondered what people in that position do & what people do if it increases to £200k, £250k etc. One million plus is a whole new ball game though & certainly not relevant to me.

Id guess they pay the extra tax to withdraw the dividends.

[samiyer]

Simple

A question I have always wondered about too but I think setting the turnover at £1m+ profit has turned the thread into irrelevant answers for contractors.

I've just set out on my 'Plan B' & if it takes off like I hope, within 3 or 4 years I would have a company turning over at least £100k and more likely £150k+. At the moment my company turns over around £75k as a contractor & I pay myself around the £40k+ mark to avoid extra tax BUT if Plan B works then I'd certainly want to get my hands on more of the company cash. I've also wondered what people in that position do & what people do if it increases to £200k, £250k etc. One million plus is a whole new ball game though & certainly not relevant to me.

In your case if you had your wife (with req. qual/exp. & provided she's not employed already), who can be appointed as a Secretary to your Company, this way the company can provide for salary to your wife again upt the 35K+ mark, this way save on both sides

[petergriffin]

What do rich people do?

Google Jimmy Carr

[Jog On]

Any retained profit over £32k I invest through the LTD. If I get to a point where the income from investments > contracting income and I have to be classed as a closed investment company I'll be a very happy man.

I don't do high risk trading through the LTD (do that through a personal spread betting account).

[Gaz_M]

Hi All,

Have a query. I see a few posts in this forum, and people say that they normally take out dividends from the company, to avoid less tax. They don't take high dividends out to avoid higher tax bracket, but what if you had a company turning over £1m+ profit and your the sole owner? Taking out 100k a year would save less tax but wouldn't be able to buy a house etc. Are dividends of £500k+ normal?

A question I have always wondered about too but I think setting the turnover at £1m+ profit has turned the thread into irrelevant answers for contractors.

I've just set out on my 'Plan B' & if it takes off like I hope, within 3 or 4 years I would have a company turning over at least £100k and more likely £150k+. At the moment my company turns over around £75k as a contractor & I pay myself around the £40k+ mark to avoid extra tax BUT if Plan B works then I'd certainly want to get my hands on more of the company cash. I've also wondered what people in that position do & what people do if it increases to £200k, £250k etc. One million plus is a whole new ball game though & certainly not relevant to me.

[BrilloPad]

I get my butler to sort it

sadguru

[northernladuk]

I have a great family, a house I like, a car I like and fabulous friends. That makes me as rich as anyone........ but I don't have enough cash to make it worth investing

[LisaContractorUmbrella]

They spend all of their time working on earning their next million and pay a very very good accountant lot of money to worry about their tax bill

[Sally@InTouch]

Hi All,

Have a query. I see a few posts in this forum, and people say that they normally take out dividends from the company, to avoid less tax. They don't take high dividends out to avoid higher tax bracket, but what if you had a company turning over £1m+ profit and your the sole owner? Taking out 100k a year would save less tax but wouldn't be able to buy a house etc. Are dividends of £500k+ normal?

They usually pay equally rich business advisers lot's of money to set up complex offshore arrangements. Mr. Carr springs to mind recently, although his wasn't a particularly complex arrangement.

[bless 'em all]

That's a good question.

I tell governments to write off Third World debts using their tax-payers money whilst hiding my fortune in off-shore accounts and tax havens.

Bono

[Nixon Williams]

Provided the company has the profits, then the company can pay whatever level of dividends they deem fit.

I seem to recall that Philip Green's Arcadia Group paid out dividends of £1 billion a few years ago, although as the shares are held by his Monaco based wife, the extra tax was not an issue.

[kingcook]

What do rich people do?

Let me google that for you

[BlasterBates]

Jump for joy that their problem is how best to minimise tax on 1million quid.

The next thing they would do is go and see an accountant, after all HMRC will paying around 50% of the fees. I could imagine that retaining profit for less profitable years might be a good idea.