SetH
Member
Registered: 15th Jul 01
User status: Online
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I know there are a few accountants on here so just wanted to run this past you.
I am an IT contractor working through my own limited company. As my contract does not come under IR35 i currently pay myself purley in dividends.
however my new contract will come under IR35 so I will be paying myself a small salary and the occasional dividend.
Am i right in saying there is a limit where i wont have to pay NI and income tax? HAve been told this limit is £420/month.
thus would paying a small salary of £420 a month + a dividend be tax efficient?
cheers.
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Hammer
Member
Registered: 11th Feb 04
User status: Offline
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You can go up to £435.00 without incurring tax and NI but yes you are correct that is the most tax efficient way of working if you can live on that wage a month before taking dividends.
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SetH
Member
Registered: 15th Jul 01
User status: Online
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In the tax mans eyes, how often can you take a dividend without it looking dodgy etc?
Another contractor i know pays himself £420 a month and takes about a £600 dividend each month also.
Would i be better to do the £420 as salary then take big dividends every 3 months or so?
thanks.
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Robbo
Member
Registered: 6th Aug 02
Location: London
User status: Offline
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its quite complicated mate, your best off getting proper advice tbh
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Hammer
Member
Registered: 11th Feb 04
User status: Offline
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Yip quarterly dividends are the way we go about it in here anyway and our accountant has worked for the Inland Revenue for ten's of years. They have flags for anything untoward that crops up which will be caught eventually.
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SetH
Member
Registered: 15th Jul 01
User status: Online
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quote:
Originally posted by Robbo
its quite complicated mate, your best off getting proper advice tbh
Yeah i have emailed my accountant, just trying to get a 2nd opinion as well 
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