Limited Company help needed.

annie12

My husband has a limited company, he is the sole director & employee. His trading year runs to 31/3/07. Is it possible to pay himself salary for the whole of next year (01/4/07-31/3/08 minimum wage) in 1 payment on the 1/4/07, thereby paying N.I & tax in 1 pyt and only drawing dividend from the company thereafter??

Any help/advice would be welcome.
thanks
annie

pagan705

why does he want to pay himself for the whole year in one go ?

It would be much better to just pay himself monthly. I really can't see how he could justify paying himself in one go for the year for work he hasn't actually done and how can he know that he would still be trading in 6, 11 or 12 months time ? it could also leave him open to investigations by HMRC.

Maybe 'the company' could give him a loan equal to a years salary then he could repay it back monthly with his dividends.

annie12

pagan705 wrote: »

why does he want to pay himself for the whole year in one go ?

It would be much better to just pay himself monthly. I really can't see how he could justify paying himself in one go for the year for work he hasn't actually done and how can he know that he would still be trading in 6, 11 or 12 months time ? it could also leave him open to investigations by HMRC.

Maybe 'the company' could give him a loan equal to a years salary then he could repay it back monthly with his dividends.

Thanks pagan705, I think it was more for ease & also to help with financial budgeting. He doesn't have overheads, outlays etc so if he were to stop trading, it wouldn't be a problem. I can understand what you're saying though, not sure if he's realised that!

richt71

Why can't he take a dividend? That's what I'd do but I'd get professional help from an accountant first TBH as you really don't want a huge tax bill for doing stuff wrong...always best to check first.

greyteam1959

You need to speak to your accountant really but this is how I do it.
Pay yourself just enough to take you into the tax and national insurance bracket every month this ensures that your pension rights etc are not affected.
Then declared a big dividend ie £30 000 on which the company has to pay tax.
Put the dividend back into the company ( it just a paper transaction really) then draw from this money at £2500 per month .
This is the best way to avoid paying too much tax

ukbill69

Take the dividend in full after £5200 per year, most directors do.