salary vs dividends | AccountingWEB

salary vs dividends

I know that when advising clients on how to structure salary and dividend levels the most efficient way is to get them to pay a salary part way between the first 2 NIC levels such that they get an NIC contribution on their record but don't have to pay any NIC.  I also know that doing this can cause problems if a director wants a mortgage or a pension later on.

Am I the only one out there that fells uncomfortable advising every time that directors structure their pay in this way?  The majority of my company clients are one-man bands often generating in excess of £100k for their companies.  It almost seems like they are asking for trouble from HMRC if they take a salary of between £5 and £6k with the rest as dividends (after CT is withheld of course).  Has anyone experienced HMRC trying to argue that the dividend payments should be in fact re-classified as salary? 


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Not a problem (touch wood)

andypartridge |


Steve Holloway |
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zarathustra |
zarathustra's picture

..and from the other side

cverrier |
cverrier's picture

Thank you

Anonymous |

Nothing but hot air

Ken Howard |

Rember the Contributions Agency?

lfidler |
lfidler's picture

No Minimum Wage

clegganator |
clegganator's picture

"Director's aren't subject to minimum wage because they are offi

Steve Holloway |
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gbuckell |
gbuckell's picture


Anonymous |

I'm more cautious

Mallock |

Other problems with Dividends

amb.hentons |

Dividends V Salary

davidirwin1 |

£10K salary "broadly neutral"?

Malcolm Veall |
Malcolm Veall's picture

The monthly dividend problem myth

shoshana |

Pension payments

honesty |

PA Holdings case law

Dunedin |