Best way to get paid from a ltd company

TheFatChef

Hi, sorry I have searched lots on this and keep getting confused so I am hoping for some concise information.
My partner has set up a ltd company as she works as a chef through various agencies and they prefer that a ltd company just invoices them for payment, they dont deal with self employed / sole trader.
The company is set up and registered etc but we are trying to work out the best way for her to actually get paid as such.
 Can anyone just give me a brief synopsis of the different options with regards to what taxes and national insurances need to be paid.
IE if she just takes dividends then the company will pay 19% on profits before dividends and she will pay 8.75%. are there any other costs to consider this way?
If she takes a salary then she pays PAYE but I think the company is also liable for employers NI as well as some tax 
I just need a breakdown of the various options so she can start getting some money back out, legally with minimal losses.

Annual turnover will only be 40k region, expenses will be fuel and the occasional bit of uniform so no great write offs on expenses

uknick

Sorry, but my standard answer for this type of question is"ask your accountant" as there's not really a brief synopsis one can give as each person will have different requirements.  Your accountant can be given ALL of her expected financial position to allow them to give a full answer based on all the facts.  For example, how does she wish to pay for her private pension contributions; through the company, by herself from taxed income or some other way?

If you don't have an accountant, have you thought about how you're going to file annual accounts and the tax return?

Bookworm105

whilst I agree with the core of UKnick's answer, and crucially assuming this is her only source of income, then a brief synopsis is:

1. always take a salary via payroll to ensure she gets National Insurance credits - but accountant must advise on the actual amount after factoring in any private pension options and also after considering the threshold below which no employer NI is payable by the company.

2. take the rest as dividend, (but if breaching the higher rate income tax threshold consider living more frugally and leaving the money in the company instead)

the salary counts as a cost for the company so reduces its profits and corp tax to pay. However a salary is taxed more heavily than a dividend. Hence the need to strike a balance looking at the total picture of company and personal taken together - hence the need for comment from an accountant with access to everything

be very careful if she claims expenses through her company, especially travel expenses. Her accountant needs to discuss that with her in detail

TheFatChef

Thanks for the advice but it sort of missed the question.
I just want to know what taxes and national insurances get paid in what circumstances.
If the company doesnt have any employees or  if it does etc.

tacpot12

You should both have a watch of this video as this explains the taxes involved under different scenarios. Make sure you also read the comments: https://youtu.be/JLeYk3-TIFI?si=sOm_I2XaSDoLeRI9

Bookworm105

TheFatChef said:

Thanks for the advice but it sort of missed the question.
I just want to know what taxes and national insurances get paid in what circumstances.
If the company doesnt have any employees or  if it does etc.

your title was: best way to get paid from a company.
We both answered that 

your "clarified" comment just affirms that you lack even the most basic knowledge needed to run a Ltd company and should therefore be seeking to talk to your accountant for the reasons already outlined

abushohag

Below tax threshold and dividends have been most tax efficient for long time, any other ideas?

prowla

I suggest paying a living wage via PAYE (with tax & NI) and the rest via dividends.

Note that employers contributions are also required.

The P&L sheet will define what's available to issue as dividends and also read up on Corporation Tax.

Bookworm105

prowla said:

I suggest paying a living wage via PAYE (with tax & NI) and the rest via dividends.

why would an accountant suggest that? It is very far from being tax efficient in the context of a one person (director) Ltd company which is not bound by minimum/living wage rules..

MeteredOut

https://www.1stformations.co.uk/blog/most-tax-efficient-way-to-pay-myself-from-my-limited-company/

(this is just one of many websites that explain your options, along with what *might* be the most tax efficient method for you)

But, I'd also advise getting an accountant to work through this with you, and also to do your payroll.

DullGreyGuy

Given you are incorporating... are the roles inside or outside IR35? If its inside, which would seem likely to me unless the ultimate clients are too small to be caught by IR35, then most won't allow you to use a Ltd and if they do how you can take payment is materially different.