Small salary when a director/shareholder has salary over £120k

If...

... instead of a £120,000 dividend, the client takes a £5,000 salary and a £115,000 dividend, the client will end up paying £153 less tax, and the company ends up paying £1,000 less.

That extra £1,000 could be paid out as a dividend, on which further tax of £306 would be paid, leaving them with £694. Add on the £153 to that and the client is £847 better off.

So, yes, I'd say it was worth it.

I would say keeping NI contributions up to date is more relevant. You never know what might happen to your client in the future and if there are any changes to state pensions when they retire. 

Hmmm

Somehow I don't think someone with dividend income of £120k pa is going to be too worried about changes in legislation which may affect the state pension.

Maybe they should be. The state pension is £110 per week. With an annuity rate of say, 4%, that equates to having a pension pot of £143,000. And that doesnt cost a penny in the example above.

And they might not have pension tax credits in 20 years time.

And nobody knows when things might change, something disastrous could happen to them next week.