Taking a lower salary and higher dividend tax ...?

Is taking £8000 Salary and £100,00 dividends deemed NIC/tax avoidance?

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Shareholder director  works as an employee 9-10 hours a day. ( avg 40 Hours per week). He only takes £8K salary per annum. (tip:  Min wages )

He takes £100,000 as dividends per annum.

Is this tax law/compliant ? 

Please share your thoughts.

Replies (18)

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By Truthsayer
04th Feb 2020 11:15

Yes. Nearly every one man company does it.

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Replying to Truthsayer:
RLI
By lionofludesch
04th Feb 2020 12:01

Truthsayer wrote:

Yes. Nearly every one man company does it.

Not sure "nearly every" one man company takes £100,000 in dividends.

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Replying to lionofludesch:
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By legerman
05th Feb 2020 13:35

lionofludesch wrote:

Truthsayer wrote:

Yes. Nearly every one man company does it.

Not sure "nearly every" one man company takes £100,000 in dividends.

I'd love to, but not quite there yet!!!!

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Lone Wolf
By Lone_Wolf
04th Feb 2020 14:01

My thoughts... are you selling yourself as an accountant to the public?

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By Matrix
04th Feb 2020 12:07

It is sub optimal due to the loss of personal allowance.

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Replying to Matrix:
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By The Dullard
04th Feb 2020 13:11

How do you know that the individual doesn't make donations under gift aid of £6,400+?

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Replying to The Dullard:
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By Matrix
04th Feb 2020 14:00

Because he doesn’t have a competent adviser?

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By ireallyshouldknowthisbut
04th Feb 2020 13:41

Why would you lose your PA like that?

And why do you think minimum wage matters?

Leave it to your accountant.

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Replying to ireallyshouldknowthisbut:
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By The Dullard
05th Feb 2020 11:07

Income £100,000, personal allowance, £12,500 .
Income £108,000, personal allowance £8,500. I'd have said £4,000 had been lost

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ALISK
By atleastisoundknowledgable...
04th Feb 2020 18:28

Hasn’t your accountant suggested a pay rise of £632pa?

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Replying to atleastisoundknowledgable...:
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By Matrix
04th Feb 2020 19:33

I hope you don’t offer tax advice - any extra would be taxed at 60% (less tax relief of 19%).

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Replying to Matrix:
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By The Dullard
05th Feb 2020 11:08

I think you'll find that the extra would be taxed at an effective rate of 48.75%, given that the "top slice" is dividend income.

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By Tax Dragon
05th Feb 2020 11:17

Is minimum wage really £3.84/h?

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Replying to Tax Dragon:
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By The Dullard
05th Feb 2020 11:33

What has minimum wage got to do with it?

PS. It's not called that anymore.

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Replying to The Dullard:
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By Tax Dragon
05th Feb 2020 11:40

The Dullard wrote:

What has minimum wage got to do with it?

ireally has already asked that, without the OP clarifying the point.

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Replying to Tax Dragon:
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By The Dullard
05th Feb 2020 12:57

I know that. I was wondering why you had raised it again?

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Replying to The Dullard:
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By Tax Dragon
05th Feb 2020 13:07

I hadn't run the maths till this morning.

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Replying to Tax Dragon:
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By The Dullard
05th Feb 2020 13:54

You've omitted the word unnecessarily.

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