Can i claim wages as a director of a Ltd company

Richr

Hi

I have just started a new ltd company a few months ago, and i was told by a business adviser that i can pay myself a wage ( i think he said £3500 ) and claim it back so it would cost me nothing. Is this right, or am i misunderstanding what he has said please?

Dazed_and_confused

Did this knowledgeable business advisor let you know who you would be claiming it back from?

As an aside do you understand the difference between "you" and the limited company?

Richr

I believe he meant a tax relief or claim back fto. HMRC.

I am a totally different entity to the company and cant see myself as it. Is this right?

00ec25

there are only 3 ways to take money out of a company

1. as salary (directors don't earn wages, those are what working class people get) paid via a payroll, and under PAYE

2. as a dividend upon which tax will be paid as part of your annual (personal) tax return

3. as anything else. The anything else is then treated as a loan from the company to you. If said loan is not repaid in full to the company within 9 months of its accounting period end, the company will incur a tax charge @ 32.5% of the balance borrowed

if your personal circumstances are such that you have no other source of employment earnings then typically the most sensible thing is to pay a salary which is at least equal to the lower earnings limit for NI so you get an pension credit, or up to the primary threshold so you don't pay NI but get a bit more income than staying at LEL. You could pay up to the personal allowance and pay a bit of NI if you found such to be worthwhile (most don't).

1 - 3 are the single most basic things that any accountant would have told you when you set up a company. Have you not taken any professional advice at all? (We will ignore the so called business "adviser" as their advice ought to have been speak to a competent person, not them)

Richr

Thank you.
I think the advice i got has somewhat been lost in translation probably.. I think my best bet is to get myself a good accountant. I dont suppose you know anybody in the North Shropshire area. A personal recommendation would be great as i know a good accountant are worth their weight in gold.