Salary Over £50k

T00N

I run my own business with my wife and up until now have always paid ourselves less than £50k each. I want to increase our pay as we want to move house in a couple of years. We can increase to over £50k but I know that will force us to pay extra taxes. The money we earn will be partially going into savings (1.2% Marcus account) and up to £20k each in self-maintained stock ISAs as I've been trading shares for about a year and know I can make at least 2% month profit. 
Is the best way of doing it or is there a better tax-friendly way?

Jeremy535897

I assume that your business is in a limited company, otherwise what you pay yourselves is irrelevant? You could put money in your pensions if you are near to the age that you could draw the lump sum, but that is capped at 25%. If you can manage to make at least 2% a month from stocks and shares, you should be Warren Buffet.

csgohan4

generally for normal people,you can't be tax efficient AND a high earner for ltd companies. Pay your self a minimum salary and the rest in dividends up to 50k total. So going up will mean more tax but could mean higher multiplier when apply for a mortgage.

Ensure you engage a broker and have at least 1-2 years company accounts and SA302s to hand, preferably 2

Grumpy_chap

If you and your wife share a Ltd Co then any mortgage application will not be that interested in the salary that you pay yourself, but will be interested in what your SA302's say.  Not important there whether salary or dividend income.  A good broker may also review the Ltd Co accounts, but many brokers are not sufficiently knowledgeable to actually understand the company accounts.

I doubt many mortgage lenders will be interested in the share speculation and revenue generation.  You may have had a run of exceptionally good luck in your first year.  If it is not luck but skill, then just apply the skill for a little longer and you won't need a mortgage.

apb123

 £20k each in self-maintained stock ISAs as I've been trading shares for about a year and know I can make at least 2% month profit.

Wishful thinking. Not even 0.01%er hedge funder can do that.

T00N

Grumpy_chap said:

If you and your wife share a Ltd Co then any mortgage application will not be that interested in the salary that you pay yourself, but will be interested in what your SA302's say. 

Thanks. Yes I have a broker who asked to look at the last 2 years SA302s. We then saw that the amounts on here wouldn't allow us to have a mortgage for the amount we want. My last 2 years shows an average of £90k between us per year as total income. We know we just need to put this up to £100k before starting to pay the higher tax. Ideally I want about £110k between us to save up for the house price we want and allow us to get a mortgage for that amount.

You may have had a run of exceptionally good luck in your first year.  If it is not luck but skill, then just apply the skill for a little longer and you won't need a mortgage.

I've had the business for 16 years and it's pretty much increased every year although I don't always increase my takings. 

I've been trading shares for about year now, albeit with a modest amount (currently have £7k invested). I started off well earning about 10% a month then it slipped during March/April for obvious reasons. During May and June I got it back up to about 5% average so I think 2% is easily done. The most I can earn in a savings account is 1.2% a year so even if I only made 1% a month then I'm already 10x better off.

OldBenKenobi

T00N said:
 I've been trading shares for about a year and know I can make at least 2% month profit. 

Nonsense. Even if true for your first year, there is no way you will maintain that monthly return.

T00N

OldBenKenobi said:

Nonsense. Even if true for your first year, there is no way you will maintain that monthly return.

I guess you’re a failed trader then. Just because you can’t do it doesn’t mean you should spread your negativity amongst others.

csgohan4

T00N said:

OldBenKenobi said:

Nonsense. Even if true for your first year, there is no way you will maintain that monthly return.

I guess you’re a failed trader then. Just because you can’t do it doesn’t mean you should spread your negativity amongst others.

trading shares in a tax wrapper I assume? Does it include funds ?

T00N

csgohan4 said:

trading shares in a tax wrapper I assume? Does it include funds ?

It's an ISA share dealing account so yes £20k each a year is tax free.

penners324

if the business only makes £90k a year profit then that is what lenders will look at.