2024 Budget - Dividends or Salary

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Has anyone worked out yet whether it is still beneficial to continue with low salary plus dividends for sole director companies from April 2024 or whether it would be beneficial to reverse to low dividend plus salary?

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RLI
By lionofludesch
06th Mar 2024 14:15

Jeez - give us a minute or two.........

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By TAS1234
06th Mar 2024 14:21

I've been asked by a client already!!

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By Leywood
06th Mar 2024 14:33

Better crack on and get it worked out then

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RLI
By lionofludesch
06th Mar 2024 14:39

No rush, is there?

It's months before you need to decide. Plenty of time for a proper, full debate.

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By Paul Crowley
06th Mar 2024 14:40

Agree
So many factors that OP does not mention.

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By Leywood
06th Mar 2024 14:45

I was trying to be funny. I know, I shouldn’t!

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By lionofludesch
06th Mar 2024 15:00

Leywood wrote:

I was trying to be funny. I know, I shouldn’t!

I realised that. But there are, indeed, months ahead for the sums to be worked out.

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By Tax Dragon
06th Mar 2024 17:12

lionofludesch wrote:

Plenty of time for a proper, full debate.

Doesn't your normal answer about tipping points blah still hold good?

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RLI
By lionofludesch
06th Mar 2024 17:30

Tax Dragon wrote:

lionofludesch wrote:

Plenty of time for a proper, full debate.

Doesn't your normal answer about tipping points blah still hold good?

Thresholds? Absolutely. They're the 42 of the salary/dividend debate.

But I'll leave working out where they lie to you young people now.

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DougScott
By Dougscott
06th Mar 2024 14:53

After today and other recent changes I might be advising some clients that it is really not worth them running a company unless they really, really want to. My guess is that HMRC and the Chancellor would also like to see less small companies on the register....

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RLI
By lionofludesch
06th Mar 2024 15:03

Dougscott wrote:
My guess is that HMRC and the Chancellor would also like to see less small companies on the register....

I would have jacked up the Confirmation Statement fee big time, which would have thinned out the zillions of posts on this forum about whether the querists company is dormant.

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By FactChecker
06th Mar 2024 15:40

'appen I agree ... but whenever the potential for unintended consequences raises it's head, I'm reminded of a (one-sided) 'conversation' I had with an apoplectic gent in 1969:
location = IoW
timing = glorious summer (and also imminent start of their 1st Music Festival)
me (resplendent in full hairy-but-colourful regalia) = "Afternoon, nice day isn't it"
him = "Would be improved by just one atom bomb - take out all of you in one go"!

... he seemed unaware of the consequences to what he was trying to 'protect'!

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By DJKL
06th Mar 2024 17:17

They may attack us but they will never destroy our SPVs.

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By Mr_awol
06th Mar 2024 16:29

I'd vote yes - definitely dividends or salary.

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By Adam12345
12th Mar 2024 14:18

Some of the computations are bonkers.... Generally, unless there is any unused employers NI allowance, a salary of £12,570 + dividends works out best.

You have to guestimate what rate of corporation tax the company will pay/save, whether any employers NIC allowance will be available, the individuals other income, whether the company will have sufficient profits to benefit from the corporation tax saving.

Non-tax considerations too - in some scenario's it would be better on a higher salary and £500 in dividends however, there is a significant cash flow advantage from paying yourself a dividend compared to a salary. Furthermore, to keep your take home pay similar, you'll need a higher salary than you would a dividend.

Unless there is an unused element of the employer NIC allowance, it will be a salary of £1,047.50 per month + dividends in the vast majority of cases. There are exceptions to the rule - if a director is over state pension age and doesn't pay employees NI being a common one.

Good luck - it certainly isn't a 'one size fits all approach' like it was a few years ago.

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