Most tax efficient way to pay directors/owners

The two Directors of my company (Company A) want to set up another company in order to charge company A for their time. They will then be paid by the second company as dividend with a small salary to keep them under the NI and PAYE threshold. They will pay corp tax on any profit in the second company but presumably will minimise the PAYE and Ni ers liability.

Is this method still acceptable to the revenue. The new company is set up purely as a way to charge out their costs. They also intend to take funds directly out of company A with these transactions being offset against as payments on account against the invoices generated from the new "service" company.

The other alternative would be to pay a dividend through the existing company (which they will not be employees of but just shareholders). The only problem here is having sufficient profits in the business to keep paying regular dividends.

Has anyone got any other suggestions or alternatives to minimising the personal tax and NI bill for company or is this still the best most acceptable setup?

Many thanks

Paul

Comments
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Directors are surely employees

firtrees |

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blok |
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There must be a reason ...

Steve Holloway |
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blok |
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No they are shareholders of A too ....

Steve Holloway |
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blok |
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Reply to Blok

paulh47 |

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blok |
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Blok Reply

paulh47 |