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Salary V Dividend

DawnyDawny Settling In NicelyMAAT, AAT Licensed Accountant Posts: 60
I have a client who is sole director and shareholder of his consulting business. He doesn't pay himself regularly and has only been operating for a year. He's about to take his first withdraw from the company as a dividend. Although this payment is legal as there are enough funds in the reserves, the director doesn't want to take any as salary.

Should I advise to take at least some of this payment as salary?

The director is over 65 so there is no benefit for pension.

Thank you for your help!

Comments

  • DawnyDawny Settling In Nicely MAAT, AAT Licensed Accountant Posts: 60
    No, the director doesn't receive any other income and there would be no tax advantage to taking a salary.

    My question is really on thoughts on how the HMRC would view a company where only dividend payments were being made to the director, as opposed to a salary.
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,431
    You mention he is over 65 does he already receive a state pension and private pension? If below the personal allowance it would be beneficial for him to take a salary up to the PA level as this is is deductible on his ltd co profits.
  • NeillawNeillaw New Member RossendaleMAAT, AAT Licensed Accountant Posts: 266
    Is the company registered for PAYE.
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