LTD Director & Salaried P/T- Salary or dividends?

oldbikebloke

for a one employee payroll you can do it for free yourself using the HMRC Basic PAYE tool - you just have to remember to run each month and do a few extra submissions at the year end. Failing that don't let an accountant rip you off for that "service". If you look around you'll see tariffs for company accounts often include a "free" payroll if it is as simple as yours: 1 employee, fixed salary, in other words all that needs doing is press a button once a month and twice at year end as their payroll system (which will be more advanced that PAYE basic) does it all for you so apart from a software licence fee it costs the accountant practically nothing to operate such a payroll (eg £10 per month fee would still leave them greatly in profit).
https://www.gov.uk/basic-paye-tools

Duckdoodles

oldbikebloke said:

for a one employee payroll you can do it for free yourself using the HMRC Basic PAYE tool - you just have to remember to run each month and do a few extra submissions at the year end. Failing that don't let an accountant rip you off for that "service". If you look around you'll see tariffs for company accounts often include a "free" payroll if it is as simple as yours: 1 employee, fixed salary, in other words all that needs doing is press a button once a month and twice at year end as their payroll system (which will be more advanced that PAYE basic) does it all for you so apart from a software licence fee it costs the accountant practically nothing to operate such a payroll (eg £10 per month fee would still leave them greatly in profit).
 

Thanks Oldbikebloke. Yes, I signed up on that initially, before I realised I'm in over my head overall and need an accountant. At the end of the call, I'll ask for a full break down of items and then opt in and out of stuff I can handle myself. My friend who also uses him for her Ltd. says he charges her something like £1400 including about £600 for a tax return. But she doesn't have a salaried job on the side so it's less complicated. I don't know if that's a fair price or not, but she seems to be happy with him.  

Duckdoodles

Jeremy535897 said:

Oldbikebloke has given you a lot of assistance. The only question in my mind is whether it is still marginally better to take £8,784 as salary, compared with £8,784 dividend (as Oldbikebloke said, most people take some salary because they need to hit the right amount to have a year's NIC credit, but you don't). The tax on £8,784 salary at 20% =£1,756.80. There is no NIC. The CT saved is £8,784 at 19% = £1,668.96, so net cost is £87.84, plus the cost of running payroll, but the same sum taken as dividend results in tax of £658.80. I think this is right, but it's a long time since I did this sort of thing (I remember apportionment). No doubt someone will correct me if I've got it wrong.

I spoke to the accountant and he seemed to think, bearing in mind my part time job, it would be better to take part salary (with just 20% tax and no NI) and the rest as dividends. But he said I need to send all my info and he'll check and also quote me his fees for the work. If I get further detail I'll share. 

csgohan4

have you considered salary sacrifice into a SIPP so you have maximum tax efficiency, you save on NI and dividen tax/ Corp tax

Duckdoodles

csgohan4 said:

have you considered salary sacrifice into a SIPP so you have maximum tax efficiency, you save on NI and dividen tax/ Corp tax

I just did a google because I had no idea what a SIPP is! So no, it hadn't occurred to me and I feel too green around the ears for it. I've added it to my list of things to ask the account about, though so thank you for making me aware. 

csgohan4

Duckdoodles said:

csgohan4 said:

have you considered salary sacrifice into a SIPP so you have maximum tax efficiency, you save on NI and dividen tax/ Corp tax

I just did a google because I had no idea what a SIPP is! So no, it hadn't occurred to me and I feel too green around the ears for it. I've added it to my list of things to ask the account about, though so thank you for making me aware. 

Obviously the main negative is you cannot access until 55 years , but very tax efficient, just make sure you don't put in too much to exceed for 40k AA

Duckdoodles

Just an update. I got a quote of £100 per month. £60 if I do the monthly bookkeeping and Confirmation statement submissions myself.  

oldbikebloke

Duckdoodles said:

Just an update. I got a quote of £100 per month. £60 if I do the monthly bookkeeping and Confirmation statement submissions myself.  

does the £60 include payroll for the company salary?
£100/mth is lower end of a ball park cost for company accounts, but is a good figure if it also includes your personal tax return.
£60/mth for "only" having to take on the bookkeeping yourself is an excellent figure if it also includes your personal tax return. (Caveat being what system will you use for the ledger?  If the accountant includes access to their software that you enter the bookkeeping on that is a win win, less so obviously if you need to pay a licence fee yourself for your own ledger) 

The confirmation statement is money for old rope, unlikely you'll have any changes, so just pay the £13 annual fee and press the no change submit button. Job done. 5 minutes "work"

Duckdoodles

oldbikebloke said:

Duckdoodles said:

Just an update. I got a quote of £100 per month. £60 if I do the monthly bookkeeping and Confirmation statement submissions myself.  

does the £60 include payroll for the company salary?
£100/mth is lower end of a ball park cost for company accounts, but is a good figure if it also includes your personal tax return. £60/mth for "only" having to take on the bookkeeping yourself is an excellent figure if it also includes your personal tax return. (Caveat being what system will you use for the ledger?  If the accountant includes access to their software that you enter the bookkeeping on that is a win win, less so obviously if you need to pay a licence fee yourself for your own ledger) 

The confirmation statement is money for old rope, unlikely you'll have any changes, so just pay the £13 annual fee and press the no change submit button. Job done. 5 minutes "work"

Sorry, forgot to include what it covers:

• Monthly bookkeeping, 
• Annual accounts preparation & submission
• Corporation tax preparation & submission
• Confirmation statements (CS) submission and 
• any other related advice you'll need from time to time. 
  
  So £60 excludes the monthly bookkeeping which I think means Salary and CS submissions. He advised me to open a Mettle bank account which apparently comes with Freeagent software for free. Apparently Mettle is free to join. 
  
  That's reassuring about the CStatement. I was going to go for the £60 option. THANK YOU!

oldbikebloke

Nat West owns both Mettle and FreeAgent and is keen to build business volume for both and both labels work well together and are keen to support each other's software developments going forward (their cross promoting is rather in your face at times).
Just be aware of the status of Mettel, it is just a software app, it is not a regulated bank, and you have no FSCS protection as it is not Nat West (Or technically the parent company RBS)

FreeAgent does include Payroll so that is sorted 
looks like you are going to be well set up - if you have any problems with FreeAgent drop me a PM and I'll happily help for free (used to work at a practice with 700 clients on it)

the remaining issue therefore is your personal tax return which you may want to get someone to do first time then DIY it once you see what they do and you are confident nothing significant will change next time

register your e mail with co hse then follow this , is easy.
https://www.gov.uk/file-your-confirmation-statement-with-companies-house