PAYE Tax Code for Salary Dividend mix Sole Director

PAYE Tax Code for Salary Dividend mix Sole...

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My client is a sole Director of her Limited Company.

She was employed by a large bank up until February this year on a high salary.

Set up her limited company in May this year.

She has started to generate income and has now set up her payroll scheme.

She does earn £1000 a month from another company which is done through their payroll scheme. (as non exec director)

HMRC have given her a tax code of D1 w1m1 in her new company which seems to reflect her high earning from last year. Does this sound right?

What would be the best way to pay herself in her new company? Dividends only OR a salary/dividend mix? If she takes he salary does the D1 w1m1 sound right?

Always find tax coding a bit confusing

Thanks

Replies (4)

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By Tim Vane
05th Nov 2015 09:41

Even if the code is confusing you (really?) surely you can do the maths. Is a salary appropriate if she is earning 12 x £1000 elsewhere?

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By soundadvice
05th Nov 2015 16:35

I rather agree. My thought was as she is earning a salary elsewhere then there is no point paying her a salary here.

I was interested however in how they work out the tax code given she is only earning 12,000 a year elsewhere and she won't be an additional rate tax payer this year even with her dividends.

Is it a case that they look at last year and wait for you to challenge it?

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By stratty
05th Nov 2015 16:49

No salary

I agree with the other posts here.  I would not process a salary for this woman as there is no benefit.

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By Matrix
05th Nov 2015 19:57

Well HMRC won't know unless you tell them.  Call them up and get her tax code changed.

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