Hi
I have a client who is a limited company, he pays himself minimum wage (£7696) and dividends, he also pays his mum minimum wage (£7696) to do his secretarial work, he wants to give his mum dividends as well but am not sure how much to put through, his profit is £80k, he has currently take out £34,000 for himself and wants to know how much more he can take out before getting taxed, I have advised on rates and amounts.
I do not want to give his much too many dividends if it will end up in some sort of investigation, after all he does the majority of the work so he will get the majority of the pay.
Any advise would be greatly appreciated.
Replies (8)
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You don't mention who owns the shares.
By the way, £7,696 is not the minimum wage. It is the maximum wage that can be paid without triggering an NI liability.
Bit more than minimum wage
So it's a bit more than minimum wage for his mum ? £30 an hour or so ?
How much does he want to pay her in her "remuneration package " ?
Client's choice
The risk with the salary is that it will be challenged as not being for the purpose of the trade and disallowed for Corporation Tax.
Not sure about the shares - I've not had personal experience - but I'd be toey about the possibility of the shares being considered to be a settlement.
The client needs to be made aware of the risks and then he can make his choice.