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PAYE versus Dividends

PAYE versus Dividends

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My client has just setup his own service company and is working through it as an IT contractor. His engagements will be a combination of both IR35 and non-IR35, although at present the work so far has been non-IR35. Due to previous employment in this personal tax year, he has already earned c.£30,000 through PAYE so the most tax efficient way to take his money out of the company would be through dividends. As long as his engagements remain outside of the IR35 rules is this an acceptable approach ? I am concerned that this will flag up on his SA tax return, let alone any considerations around minimum wage. After all, he is a full time employee of his own service company...any thoughts and guidance much appreciated.

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By johngroganjga
12th Dec 2013 16:53

Taking as read your assurances that IR35 is not in point here, I can see no difficulty with what you propose. Minimum wage doesn't come into it if he is a controlling director.

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Replying to Portia Nina Levin:
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By frustratedwithhmrc
13th Dec 2013 03:26

Not quite correct John

johngroganjga wrote:
Taking as read your assurances that IR35 is not in point here, I can see no difficulty with what you propose. Minimum wage doesn't come into it if he is a controlling director.

Minimum wage doesn't come into to it provided he is an office-holder (i.e. director, company secretary) and has no contract of employment for the company of which he is an office-holder.

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By johngroganjga
13th Dec 2013 06:06

Not incorrect then. Just correct for slighly different reasons!

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Stepurhan
By stepurhan
13th Dec 2013 07:58

More a clarification

Office-holders are not entirely outside minimum wage. They are only outside if they do not have a contract of employment. A contract brings them within minimum wage, even if it doesn't change what they would do without one.

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