Tax on second income: Limited company?

holly_hobby

Pennywise wrote: »

At the moment, HMRC have no powers to argue that a director should be paid a market salary.

Thanks Penny,

By reasonable, I don't mean going market rate - 2 different things, or 2 different understandings maybe.

Ergo, what I meant is that I pay myself a relatively, but not stupidly low (in relation to the nature of my role), salary , and take the rest (I wish to withdraw) as div's - under the guidance of my accountant.

And thats why DIY accountancy esp for Ltd Co's, in my view, is not advisable, unless of course, that is the individuals profession.

Hope this helps

Holly

comeandgo

I disagree Holly. I have seen a few directors who do not take any salary from their Ltd company, just dividends. Directors are not subject to minimum wages.
Many directors just take an absolute minimum salary, just over £7k I think it is, which is enough to pay NI contributions to get a government pension - rest is dividends.

holly_hobby

Not sure what you're disagreeing with TBH, I have said I take a low salary, but not ridiciously low as you have made the comment yourself re the 7k reference - but I don't take all my drawings as dividends .... and thats at the advice of my accountant.

It seems you don't agree with the way they have my submissions set up and the experience I've relayed, so I'll refer them to this thread, to ensure that I'm not being exposed to any unnecessary or otherwise excessive tax & NI contributions - as thats the service I'm paying a chartered accountant for, assuming the advice here is also qualified.

Thanks

Holly