Directior Salary and Dividend

Hi everyone,

I'm on tier1 Entrepreneur visa with 50k route and preparing myself for the extension due soon.
Investment was made 50K through director loan and director withdrawn minimum salary from the business account as Company was in profit in first year.

I need clarification on following questions.

Q1. Can director withdraw salary as long as 50K investment remain in the bank account and company showing profit?

Q2. Can director take dividend if the company is in profit and investment remained in the bank account?

Looking forward to hearing your reply.

Thanks in advance

I have applied last week as well same route, I have taken £5300 salary and £5300 dividend, my company was in profit last year and i have also invested 50K, As i am in the same situation as you and already applied for extension so hope fully should not be any problem.

Commando wrote:I have applied last week as well same route, I have taken £5300 salary and £5300 dividend, my company was in profit last year and i have also invested 50K, As i am in the same situation as you and already applied for extension so hope fully should not be any problem.

Hi

Thanks for the above

1 - I am planning to do my extension in a month, my question is my company is in loss, my accountant is showing that I am taking minimum wage but I am not taking salary from last 1 year. Can you please let me know how do I show it.

2 - While sending the employee details like contract hours, p45, p60, p11 do we need to keep director as well as an employee and submit the details along with other employees.

1 - I can only comment privately on this.

2 - There is no such requirement to send directors wage slips or any other proof to show that directors is earning enough, no where on the application form or guidance, i have not submitted any proof of salary to HO or any self assessment documents.

Someone on this forum said director cannot draw salary or dividend . However I could not find anything related to this on HO guidelines.

Also how director would survive without taking salary from the company as he cannot work anywhere else.

I believe if company is in profit and investment remained in the bank account , there should not be any issue.

Please correct me if I am wrong.

nasir_skp wrote:Someone on this forum said director cannot draw salary or dividend . However I could not find anything related to this on HO guidelines.

You can draw salary and dividends from your company. However when someone gives his own company a loan and then company makes a profit, the logical way to draw any money would be to get the loan paid back tax free (unlike salary and dividends which are taxable)

Obviously to satisfy HO for extension, you need to show that the loan has not be repaid. If you choose to pay yourself a salary, I suggest you to make sure your business have spent at least 50K on the allowable expenses and keep your remunerations well below your profits to be safe.

Commando wrote:1 - I can only comment privately on this.

2 - There is no such requirement to send directors wage slips or any other proof to show that directors is earning enough, no where on the application form or guidance, i have not submitted any proof of salary to HO or any self assessment documents.

Thanks commando

based on answer for question 2, Can I assume that I need not to show anything regarding my salary (question 1). All the directors loan and investment has been done much more than 50K

Sorry Zimba,

I could not understand following sentence. Can you please explain in detail.

"If you choose to pay yourself a salary, I suggest you to make sure your business have spent at least 50K on the allowable expenses and keep your remunerations well below your profits to be safe."

For instance. If 40k investment is made so far and company has made net profit of 10,000 in a year after corporation tax, but investment 40k is still there. Would it be fine to draw salary and dividend both up to 7000 in this case?

Directors can take wages from company income if no profit,
As so many users asking about directors Renumration tion is acceptable and will not counts as investment.
So please there is some difference between income and profit.if no income so no director wages acceptable.

Regards

Business2business wrote:Directors can take wages from company income if no profit,
As so many users asking about directors Renumration tion is acceptable and will not counts as investment.
So please there is some difference between income and profit.if no income so no director wages acceptable.

Regards

There is nothing in the guidance related to director's salary from income or profit.

Only criteria is director's salary doesn't count towards investment.


If you've invested 50K, and have made a profit of 5K.. you can do as you wish with the 5K.

I agree with Confused90

I took salary but my total investment was larger than £200K so certainly had net £200K invested

What if someone has not invested 50K but invested less than 50k till 2nd year but do have to plan to invest remaining in future.

In this case if the company is in profit.

Can Director take salary and dividend?

Thanks