Director and Dividends

Director and Dividends

Didn't find your answer?

Can a director/shareholder receive dividends only without declaration of salary?   

Replies (5)

Please login or register to join the discussion.

Euan's picture
By Euan MacLennan
03rd Feb 2014 13:25

Yes

Why not?

I am a shareholder in Shell - they pay me a dividend, but no salary.

Thanks (1)
By Steve Kesby
03rd Feb 2014 13:30

Ah but...

... you're not also a director of Shell Euan. Otherwise you'd have to complete a Tax Return. ;)

I agree though that there's no reason to pay a salary if your personal allowance has been utilised.

Thanks (0)
The triggle is a distant cousin of the squonk (pictured)
By Triggle
03rd Feb 2014 14:08

You might want to pay a small salary though (if the director has not yet reached State Retirement age) so that the director qualifies for the State Retirement Pension and other NI related benefits,

This is usually done by paying an annual salary between the NI LEL and the NI secondary threshold.

There is no need to declare a salary just to qualify for the State Retirement Pension and other benefits if the taxpayer has already contributed enough NI elsewhere - through another employment, self-employment or partnership, Filling up the PA with rental profits would not, however, qualify as Ni is not (usually) payable on rental profits.

I agree with Steve, though, that if Euan was a director of Shell then that very fact would mean he would have to complete and submit a Vernon's football pools coupon.

Thanks (0)
avatar
By andy.partridge
03rd Feb 2014 14:54

Agreed

Furthermore, the director can not be paid a dividend, unless they are also a shareholder.

Thanks (0)
avatar
By EOAKS
04th Feb 2014 18:43

The amount you can pay as salary is increased this coming year..

As from 6 April 2014 all businesses will be allowed to reclaim employers’ secondary NIC payable up to a £2,000 limit. This does not appear to be a 'one off' by the way and will be the norm for future years.

Therefore, it will now usually be best advice for a director to receive a salary of £10,000 per annum instead of limiting the payment to the NIC secondary threshold.

The employer incurs employer’s NIC of £282.07 and the employee pays NIC of £245.28. (anyone like to check my figures!)

As the employer’s NIC payment is below £2,000 then this amount will be returned thus making the taking of additional salary more tax efficient overall compared with the taking of dividends below the £10,000 level.

This amount will also ensure state pension credits.

 

Thanks (0)