Help for single director companies

LilElvis

jimmy_f said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

I'm not sure if I am reading cinism  here or not, maybe the latter. Most company directors pay themselves this way, it's not cheating the system it is perfectly legal and normal. Most of these companies pay large corporation tax bills as mine does on the other hand. 

You weren't cheating the system, but you were taking advantage of paying less tax to increase your personal take home pay. Swings and roundabouts - you took more in the past and paid less to the State, and now you are entitled to less in return.

ComicGeek

neilmcl said:

nickykittykat said:

neilmcl said:

nickykittykat said:

Potbellypig said:

nickykittykat said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

- Genuine question - do you think I should be penalised for that now?  In other words  I had  a 'benefit' up front so now this crisis has hit it's tough luck?  

You can't deliberately give yourself a wage whereby you don't pay tax, whilst using the dividend system to pay less tax, and now expect the system to help you out. You can't have your cake and eat it.

Oh and I'm in exactly the same position.

Do you believe that is fair, even in an unprecedented crisis?  

Fair to who? The whole point of these bailouts is for the government to allow businesses, employees and now the self-employed who could go out of business a lifeline to survive. It's not about "he got his, where's mine".

I suppose 'fair' is the wrong word.  Rightly or wrongly, I (quite legally I may add) decided on the advice of my accountant to become a Ltd Co rather than self employed.  I certainly have not been living a smug, privileged life on the back of it.  I have worked exceptionally hard, with 2 boys to support, having gone through a divorce and an ex husband with a terminal illness who doesn't pay me a bean.  Regardless of how we got here, isn't it in the Gov's interest to keep my business going, as any other?  The smugness of saying 'you can't have your cake and eat it too' really gets to me in this situation.  I am a good, honest tax payer and in these unprecedented times, I would hope to be supported. I am a small 1 man business - not Apple or Microsoft!

Me too but you must admit that when you decided to go down the freelance route you did it in full knowledge that there will be good times as well as bad and presumably you factored these "bad times" into your financial planning.

So with that logic, every single company and self employed person should have factored in bad times into their financial planning, and therefore the gov shouldn't pay anyone. I'm not sure that any business plan can factor in zero income for at least 3 months, while at the same time having to meet all staff costs and expenses.

jimmy_f

Jeremy535897 said:

I didn't answer that, did I? I suppose that's because it doesn't matter whether I (or you) think it's fair or not. It probably falls into the category of "poetic justice". Do you think you saved £7,500 or more in tax in the past by not taking salary?

You really have got a bee in your bonnet about this jeremy535897. This is a completely legal and normal process. As I have said before do you take into account the thousands paid out in corporation tax on the other hand by people like us. If you were a director of a company you would pay yourself in exactly the same way. Stop laying into people for the way they have managed their businesses especially in times like this.

neilmcl

ComicGeek said:

neilmcl said:

nickykittykat said:

neilmcl said:

nickykittykat said:

Potbellypig said:

nickykittykat said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

- Genuine question - do you think I should be penalised for that now?  In other words  I had  a 'benefit' up front so now this crisis has hit it's tough luck?  

You can't deliberately give yourself a wage whereby you don't pay tax, whilst using the dividend system to pay less tax, and now expect the system to help you out. You can't have your cake and eat it.

Oh and I'm in exactly the same position.

Do you believe that is fair, even in an unprecedented crisis?  

Fair to who? The whole point of these bailouts is for the government to allow businesses, employees and now the self-employed who could go out of business a lifeline to survive. It's not about "he got his, where's mine".

I suppose 'fair' is the wrong word.  Rightly or wrongly, I (quite legally I may add) decided on the advice of my accountant to become a Ltd Co rather than self employed.  I certainly have not been living a smug, privileged life on the back of it.  I have worked exceptionally hard, with 2 boys to support, having gone through a divorce and an ex husband with a terminal illness who doesn't pay me a bean.  Regardless of how we got here, isn't it in the Gov's interest to keep my business going, as any other?  The smugness of saying 'you can't have your cake and eat it too' really gets to me in this situation.  I am a good, honest tax payer and in these unprecedented times, I would hope to be supported. I am a small 1 man business - not Apple or Microsoft!

Me too but you must admit that when you decided to go down the freelance route you did it in full knowledge that there will be good times as well as bad and presumably you factored these "bad times" into your financial planning.

So with that logic, every single company and self employed person should have factored in bad times into their financial planning, and therefore the gov shouldn't pay anyone. I'm not sure that any business plan can factor in zero income for at least 3 months, while at the same time having to meet all staff costs and expenses.

As a freelancer I, and just about everyone I've ever worked with, have done exactly that. Work is never guaranteed when working for yourself, which is the risk you take when you go into it. I don't think anyone working for themselves would say any different.

Jeremy535897

jimmy_f said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

I'm not sure if I am reading cinism  here or not, maybe the latter. Most company directors pay themselves this way, it's not cheating the system it is perfectly legal and normal. Most of these companies pay large corporation tax bills as mine does on the other hand. 

It's neither cinism nor cynism but cynicism. I answer questions asked. The post said "deliberately low" and I simply analysed the only plausible reasons for the use of that phrase. I advised people to take dividends rather than salary some years, and vice versa in the days of 42% corporation tax for small companies (now that really was a big bill) and the complexities of ACT. It was and is totally permissible tax planning. It always had adverse consequences (reduction in state pension, reduction in ability to contribute to private pension etc) but now we learn, rather too late, that it has another, completely unpredictable consequence. I  did say that you could describe it as poetic justice, and I stand by that, but I would also observe that it is a bit tough.

jimmy_f

LilElvis said:

jimmy_f said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

I'm not sure if I am reading cinism  here or not, maybe the latter. Most company directors pay themselves this way, it's not cheating the system it is perfectly legal and normal. Most of these companies pay large corporation tax bills as mine does on the other hand. 

You weren't cheating the system, but you were taking advantage of paying less tax to increase your personal take home pay. Swings and roundabouts - you took more in the past and paid less to the State, and now you are entitled to less in return.

If you run a small business of course you make savings in anyway you can whether that is on services, materials or tax as long as all of those things are legal and official.  I hate the impression here that  it  is somehow contrived to cheat the state( although you are not actually saying that .) You surely realise how much tax we pay on the other hand.

pelirocco

I am a company director and have minimum  pay through PAYE .I Potbellypig said:

nickykittykat said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

- Genuine question - do you think I should be penalised for that now?  In other words  I had  a 'benefit' up front so now this crisis has hit it's tough luck?  

You can't deliberately give yourself a wage whereby you don't pay tax, whilst using the dividend system to pay less tax, and now expect the system to help you out. You can't have your cake and eat it.

Oh and I'm in exactly the same position.

I am in the same position and agree 100% with this reply . My OH  who is the other director is pretty annoyed hes only entitled to 80% of a very small amount Ive just laughed  at him saying you cant have it both ways 

jimmy_f

Jeremy535897 said:

jimmy_f said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

I'm not sure if I am reading cinism  here or not, maybe the latter. Most company directors pay themselves this way, it's not cheating the system it is perfectly legal and normal. Most of these companies pay large corporation tax bills as mine does on the other hand. 

It's neither cinism nor cynism but cynicism. I answer questions asked. The post said "deliberately low" and I simply analysed the only plausible reasons for the use of that phrase. I advised people to take dividends rather than salary some years, and vice versa in the days of 42% corporation tax for small companies (now that really was a big bill) and the complexities of ACT. It was and is totally permissible tax planning. It always had adverse consequences (reduction in state pension, reduction in ability to contribute to private pension etc) but now we learn, rather too late, that it has another, completely unpredictable consequence. I  did say that you could describe it as poetic justice, and I stand by that, but I would also observe that it is a bit tough.

Thanks I'm dyslexic ( spelling ok I hope.) Takes me while to get to the end of a message but double checked this one . Cheers

Jeremy535897

Spelling spot on, Jimmy.

LilElvis

jimmy_f said:

LilElvis said:

jimmy_f said:

Jeremy535897 said:

If your salary was deliberately low, it means one of two things:

• you didn't need the money so left it in the company to save tax
• you took the money as dividends to save tax

I'm not sure if I am reading cinism  here or not, maybe the latter. Most company directors pay themselves this way, it's not cheating the system it is perfectly legal and normal. Most of these companies pay large corporation tax bills as mine does on the other hand. 

You weren't cheating the system, but you were taking advantage of paying less tax to increase your personal take home pay. Swings and roundabouts - you took more in the past and paid less to the State, and now you are entitled to less in return.

If you run a small business of course you make savings in anyway you can whether that is on services, materials or tax as long as all of those things are legal and official.  I hate the impression here that  it  is somehow contrived to cheat the state( although you are not actually saying that .) You surely realise how much tax we pay on the other hand.

No, you haven't cheated the State - you merely took advantage of the tax breaks legitimately available to you. Unfortunately for you the State is now not offering a level of support which benefits you in the same way as it does those who have had far less leeway in minimising their tax payments.As I said earlier - swings and roundabouts..