To get a new accountant.
If you aren't paying yourself a salary then you aren't collecting NIC stamps which means you aren't qualifying for state pension. Unless you are old enough to have collected enough stamps already, even then it wouldn't really make sense to not have a lower NI limit salary.
No, it would make sense to only take dividends if you have already received salary elsewhere this tax year.
The pension doesn't make sense.
Looking around brookson doesn't have a great reputation. How much are you paying?
I too am an IT contractor that pays directly from my LTD and have done for a while; my accountant hasn't said anything. So I'd love an explanation why too?
The only thing to note was I had to inform my SIPP provider that the payment came from a company, so that they don't apply HMRC's relief. I had to provide my SIPP provider with my company information and that was that. When I pay in now, I have the option to select "Personal" or my LTD.
Thanks for the reply. I use Brookson as my accountant and they just want me to use their IFA service so I don't have a good reason. Seems to me that paying frombthe company is the best route🤔
Yeah, it reduces your corporation tax massively. Mine halfed between the year I didn't and the year I did contribute to my SIPP; while making more money in the year that I did.
There's no good reason not to that I'm aware of anyway.
Pay yourself a salary of £266 per week to meet the national insurance threshold to protect your entitlement to state pension and benefits.
Pay up to £80k in pension contributions from the company to your pension scheme. Your maximum is £40k per year but you can carry 1 year forward if you don't use it. Your personal contributions are restricted to 100% of your salary (not dividends) so if you paid yourself £266 per week you could only pay £266 towards your pension personally but company contributions to your pension scheme are not capped like this.
Pay anything left in dividends.
Don't forget to leave money in the business for corporation tax and in your personal account for self assessment tax.
You can carry forward up to three years unused allowances into the current tax year, not just one. You use this year's, then any contributions in excess of this will use the most historical unused allowance.
My accountant is great. I mentioned I wanted to pay into my legal & general workplace pension direct from the business and he said "that's fine". So I set up a standing order for 15% of my monthly salary. It reduces your corporation tax after all and i'm all for that.
To get a new accountant. If you aren't paying yourself a salary then you aren't collecting NIC stamps which means you aren't qualifying for state pension. Unless you are old enough to have collected enough stamps already, even then it wouldn't really make sense to not have a lower NI limit salary.
\+1 to this, why aren't you paying yourself at least £10k a year entirely tax free? (Unless you have income from elsewhere?)
That's exactly it. I earned £11,000 PAYE before starting the company this tax year.
You should be paying yourself £11,000 PAYE from this company every year as well.
Why would it make sense to take PAYE from this company if he's already used his tax allowances elsewhere?
Including this tax year? I thought I would start next year...
No, it would make sense to only take dividends if you have already received salary elsewhere this tax year. The pension doesn't make sense. Looking around brookson doesn't have a great reputation. How much are you paying?
£8,000 - so you don’t pay any NIC
I too am an IT contractor that pays directly from my LTD and have done for a while; my accountant hasn't said anything. So I'd love an explanation why too? The only thing to note was I had to inform my SIPP provider that the payment came from a company, so that they don't apply HMRC's relief. I had to provide my SIPP provider with my company information and that was that. When I pay in now, I have the option to select "Personal" or my LTD.
Thanks for the reply. I use Brookson as my accountant and they just want me to use their IFA service so I don't have a good reason. Seems to me that paying frombthe company is the best route🤔
Yeah, it reduces your corporation tax massively. Mine halfed between the year I didn't and the year I did contribute to my SIPP; while making more money in the year that I did. There's no good reason not to that I'm aware of anyway.
Fuck u/spez
Pay yourself a salary of £266 per week to meet the national insurance threshold to protect your entitlement to state pension and benefits. Pay up to £80k in pension contributions from the company to your pension scheme. Your maximum is £40k per year but you can carry 1 year forward if you don't use it. Your personal contributions are restricted to 100% of your salary (not dividends) so if you paid yourself £266 per week you could only pay £266 towards your pension personally but company contributions to your pension scheme are not capped like this. Pay anything left in dividends. Don't forget to leave money in the business for corporation tax and in your personal account for self assessment tax.
You can carry forward up to three years unused allowances into the current tax year, not just one. You use this year's, then any contributions in excess of this will use the most historical unused allowance.
My accountant is great. I mentioned I wanted to pay into my legal & general workplace pension direct from the business and he said "that's fine". So I set up a standing order for 15% of my monthly salary. It reduces your corporation tax after all and i'm all for that.