Good afternoon ALL
The client currently offers his engineering consultancy work through his LTD company.
He is currently receiving about 11k pension per tax year.
So far this tax year, he has paid himself £800 worth of salary through payroll. April £400, May £400. No salary was paid in June and July as no work. Client's company has now been offered a new 6 months contract worth about £6.5k per month. Client will want to take home £2.5K month for the 6 months starting from August. This figure is after taking care of all expenses and taxes. Client is married and wife BR tax payer.
Question: Would it be appropriate to extract all of the £2.5k per month as dividend and no salary for the rest of the tax year? e.g. make the wife a shareholder with voting right and pay her £5k div @ 0%. That would leave £10k left. Then pay himself div of £5k @ 0% and remaining £5k at 7.5% =£375 tax to pay.
Will the above idea/strategy be compliant?
Many thanks for your response in advance.