If you want, you can then fold up the company and start again with a new company.
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Reply to: Drawing salary when not trading
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Previously on "Drawing salary when not trading"
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Originally posted by northernladuk View PostOh dear lord.
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Originally posted by Paddy View PostYour accountant is cr@p. You should continue to draw salary. If you are looking for contracts then you claim expenses such as travel. You can even make yourself redundant and pay yourself redundancy. If you want, you can then fold up the company and start again with a new company.
Redundancy? Are you sure?
Closing the company and restarting. Are you sure?
http://www.chrismaslin.co.uk/tax-tip...ls-overstated/Last edited by Contractor UK; 28 October 2016, 08:32.
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Originally posted by smileyface View PostCan somone please give me advice re drawing salary (and expenses) when not trading?
I have been drawing a monthly salary since April 2016 but my contract is finishing next month.
My accountant says since I won't be trading in September, I am not allowed to draw a salary. Is that true?
What about expenses? Even though I'm not trading, ie don't have a contract, I'm still the director of my company and am running it, so should I be allowed to draw a salary, as well as expenses from September onwards?
Thanks
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Originally posted by Andy O View PostMaybe the accountant said you can't draw any more salary because you didn't have a war chest and he didn't want you spending your corporation tax and leaving you short at year end.
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Originally posted by Andy O View PostMaybe the accountant said you can't draw any more salary because you didn't have a war chest and he didn't want you spending your corporation tax and leaving you short at year end.
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Thanks, I've read various info on the internet but maybe don't fully understand.
My example is taken from here, example 2: http://www.contractoruk.com/limited_...tax_guide.html
It states if you only take a salary of £8060, your first £2940 of div is part of your £11000 personal allowance.
You can therefore take a further £5000 of div and not pay any tax.
Have I misunderstood something?Last edited by Contractor UK; 28 March 2017, 12:03.
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Maybe the accountant said you can't draw any more salary because you didn't have a war chest and he didn't want you spending your corporation tax and leaving you short at year end.
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You need to start again on the new starters guide to the right and get a much better grasp I'm afraid. You should really know much of this. I don't understand how you can plod on knowing so little about how you remunerated yourself with knowing why.
Edit : oh.. Eek said that.. Didn't see it at first.
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Originally posted by smileyface View PostThanks to all for your replies.
Could it be I was not clear to my accountant, when I said not trading?
I mean my contract has finished, so am not going to bill anyone. Is that classed as not trading or dormant (or are they the same)?
Originally posted by smileyface View PostRegardless, we know the first £5000 of dividends is tax free and the personal allowance is £11000, so for argument sake, if I choose NOT to draw a salary at all, (do correct me if I'm not mistaken) I can take £16000 as dividends and not pay any tax.
So in my case, since I've taken 5 months salary (Apr to Aug), I can take the remaining 7 months salary + £5000 without paying tax?
Salary up to about £10,000 is both tax and NI free (its more complex than that but I'm keeping it simple). That salary is also an expense for the company and hence reduces the profit of the company.
The usual limited company payments for a contractor are:-
Allowed travel expenses
Salary of between £8600 and £11000 depending on your preference and that of your accountant
Dividends up to the 40% limit
Pension payment from company upto £30,000
Everything else left in the company ready for a quiet period next year...
you really do need to ask your accountant how a company works and what you should be doing to minimise your company's profit. There are various guides om the menu to the left (start at the first timers link). Then if you don't like or understand the answers from your accountant find a new one before you start having serious problems...
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Originally posted by smileyface View PostThanks to all for your replies.
Could it be I was not clear to my accountant, when I said not trading?
I mean my contract has finished, so am not going to bill anyone. Is that classed as not trading or dormant (or are they the same)?
Regardless, we know the first £5000 of dividends is tax free and the personal allowance is £11000, so for argument sake, if I choose NOT to draw a salary at all, (do correct me if I'm not mistaken) I can take £16000 as dividends and not pay any tax.
So in my case, since I've taken 5 months salary (Apr to Aug), I can take the remaining 7 months salary + £5000 without paying tax?
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I finished a contract last September (I think it was) and didn't start another until May, because I have better things to do with my time than work for other people. My company paid me my regular salary throughout, and also declared a few dividends. My accountant never batted an eyelid, so I would assume it was OK
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Thanks to all for your replies.
Could it be I was not clear to my accountant, when I said not trading?
I mean my contract has finished, so am not going to bill anyone. Is that classed as not trading or dormant (or are they the same)?
Regardless, we know the first £5000 of dividends is tax free and the personal allowance is £11000, so for argument sake, if I choose NOT to draw a salary at all, (do correct me if I'm not mistaken) I can take £16000 as dividends and not pay any tax.
So in my case, since I've taken 5 months salary (Apr to Aug), I can take the remaining 7 months salary + £5000 without paying tax?
Leave a comment:
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