Salary vs dividends - have i got this right?

 

Hi - would really appreciate a bit of short sage advice please, - I know that some of you are likely to say that I should go and see a professional, and I will, but, I'd just like to get a feeling for if I am already in the wrong, and what the suggested route would be.

 

I have a ltd co, of which I am the sole director.   Income is sporadic, and tends to come in lump sums.  Thus far I have withdrawn about 70% of the income received on the basis that I would claim this as a dividend, - and these payouts have been irregular in both timings and amounts.

I also have a paid, separate, employment that utilises my personal allowance and puts me in the higher PAYE tax bracket.

What would be the general recommended course of action?  Of course I would like to minimise, legally, my tax liability.  Should I start paying a salary from my ltd co, but that would obviously attract EE/Eer NI, and PAYE at 40%, which seems inefficient.  Can I withdraw the money from the business, and declare the dividend in one go at the end of the year, or should I declare a dividend every time I draw money?   the business is being run on a very prudent basis, and will declare sufficient profits to cover the dividends drawn (only asset in the business is a £800 laptop), and I presume this falls into the annual investment allowance and therefore 100% writedown in year 1?

Any thoughts appreciated

 

Steve

Comments
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Salry vs Dividends

davegibson00 |

Yes

thisistibi |
thisistibi's picture

What I would usually suggest

dreamcatcher |
dreamcatcher's picture

Dividends article

JAADAMS |
JAADAMS's picture