Originally posted by TheMrs
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on ""Deemed salary" versus legitimate dividends"
Collapse
-
-
Thank you
Thanks everyone, that makes me feel a lot better. We have taken steps to assure ourselves that the contract is not within IR35 (albeit I know the goal posts can subtly change at any time). But we are as confident as possible about it.
It's now clear to me that I can continue to allow for dividends without concern, provided I continue to follow the specific rules of only taking legit profits, doing the paperwork and complying with the share split.
Much obliged.
Leave a comment:
-
Timing of dividends makes not one jot of difference....
As others have said, IR35 does....
Leave a comment:
-
There's a lot of hot air talked about HMRC reclassifying dividends as salary, but the fact is that they can't and don't. All you need to do is make sure that the dividends are legal and then you can tell any rogue tax inspector to beggar off.
If they deem you caught by IR35 or if the legalities of the dividend havn't been complied with (i.e. you didn't bother doing the paperwork), then that's a different story.
Leave a comment:
-
Deemed salary is a specific charge arising from the IR35 legislation.
It has nothing to do with whether dividends are legitimate or not.
So long as dividends are paid (i) from profits (in practice that means you keep enough back to cover tax), (ii) in ratio to shares and (iii) are recorded properly then you won't run up on any rocks on that score.
Keep on the radar a possible change in rules around spousal shareholdings: Legislations been promised but isn't happening. If it does happen it won't effect dividend legitimacy, just which tax return they go on.
Leave a comment:
-
Originally posted by TheMrs View PostWhat am I missing folks?
Admittedly one very confusing aspect is that IR35 does not stop you from paying dividends at all - even if it applies to your situation. What it does, is levy an additional charge ("deemed payment") that just happens to be the same amount as if you had paid yourself 95% PAYE salary.
This is how HMRC effectively reclassify your dividends as salary. Technically it isn't reclassified at all - just that they "remind" you to apply this extra charge.
Leave a comment:
-
"Deemed salary" versus legitimate dividends
Does anyone have a way of explaining to me what if any difference there is between these? We take a relatively small salary just above tax and NIC limits, as advised by accountant, and supplement with regular dividends taken out of legal profits. For domestic accounting reasons we would rather take these dividends monthly, at least until the company has built up a decent warchest into 2nd year trading.
So, I see a lot of stuff on forums etc about the Taxman deciding to treat dividends taken as salary and back charging NIC and PAYE accordingly, but I can't see why he can? Surely if you are legally able to take a small salary and a large dividend, and are actively encouraged to do so by every accountant worth his salt, how can the Taxman then decide that what you are really taking is all effectively salary. Err. Of course you are. If by salary he means "money on which to live and do all that other stuff that wages are basically for".
What am I missing folks?Tags: None
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: