Salary V Dividend

Dawny

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!

Dawny

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.

MarieNoelle

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.

Neillaw

Is the company registered for PAYE.