Do employed directors get paid in dividends?

Stu6781

Do directors get paid a small salary and then have the rest topped up with dividends? For instance a finance director working for a company? Or do they just get paid standard PAYE?

comeandgo

Most of the companies I see directors have small wage and dividends but it depends on each individual circumstance. Some want to minimise personal tax, others want to show a large gross wage so will take all in a PAYE. I've seen some directors take over a million in PAYE.

LilElvis

Dividends are paid to shareholders. A director is not necessarily a shareholder.

spadoosh

Depends on the arrangement.

Dividends are for shareholders. So in most cases (Small and medium companies typically) directors are usually owners of the business. So in that case the most tax efficent way of getting money out of the business is to take a small salary and the rest through dividends.

If the director is not a shareholder, they will only be paid a salary via PAYE.

Stu6781

In my accountancy firm, my director (non equity/non shareholder) gets paid in dividends? Is this odd?

Stu6781

It’s a decent size firm and he’s one of a good number of directors, he’s just a senior employee basically, but his title is director and is paid in dividends primarily.

LilElvis

Stu6781 wrote: »

It’s a decent size firm and he’s one of a good number of directors, he’s just a senior employee basically, but his title is director and is paid in dividends primarily.

So ask your "friend" about his remuneration package - salary, bonus, other benefits (medical insurance, life insurance, permanent health insurance, company car, car fuel benefit etc, etc), share options, employer pension contributions (defined benefit or defined contribution), SAYE. I'm sure he'll give you chapter and verse if you ask nicely.

Stu6781

This forum is full of sarcastic comments. I just wanted to know if it was common place for a non equity director to be paid in dividends. That’s it.

Barney_Rubble_0403

That's the way our place works. We have 3 directors. 2 are the owners who have a small(ish) salary and monthly variable dividends and the 3rd is salary only.

LilElvis

Stu6781 wrote: »

This forum is full of sarcastic comments. I just wanted to know if it was common place for a non equity director to be paid in dividends. That’s it.

That's not what you asked though.

74jax

Stu6781 wrote: »

This forum is full of sarcastic comments. I just wanted to know if it was common place for a non equity director to be paid in dividends. That’s it.

So why didn't you ask that?