Salary and dividend structures?

scorpio_besal · Post by **scorpio_besal** » Wed Aug 15, 2012 9:17 pm

Thanks Gaurav, If I dont draw any salary but just take dividend then I would only be paying the 20% Co-operation tax and then 10% tax on dividend ( which would be credited back). So this way, I would be only paying 20% of 16K (net profit). Is that correct.?

gaurav76.5 · Post by **gaurav76.5** » Wed Aug 15, 2012 10:16 pm

yes....I will adviae you to confirm this with your accountant as well

scorpio_besal · Post by **scorpio_besal** » Wed Aug 15, 2012 10:20 pm

Thanks for your reply, I would check with my accountant tomorrow.

As far as UKBA is concerned, if I show them my over all earning from LTD company using NET DIVIDEND ONLY WITHOUT ANY SALARY BEING DRAWN, say about 16K from Aug 2012 till Feb 2013, would that be OK.

And the rest of the earning from my employment which is about 21K to meet the points requirement for the extension.

gaurav76.5 · Post by **gaurav76.5** » Thu Aug 16, 2012 7:23 am

yes that would be Ok.but they would want to.see the NI contribution and tax contribution as well...

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 9:10 am

Thanks again Gaurav, my understanding after reading above mention post was that on your dividends , if I have LTD company, I dont have to pay NI on Dividends. I would only have to pay 10% tax on dividends but that would be credited back as its not more than 35K.

And the since I wish not to draw any salary from my LTD company, I would only be paying the coperation tax. which is 20% of the net profit.

Is it important for a LTD company owner to draw a minimum salary from UKBA standpoint, or is it ok if I only withdraw dividends and claim points for my earning through LTD company with DIVIDENDS ONLY.

gaurav76.5 · Post by **gaurav76.5** » Thu Aug 16, 2012 9:49 am

You can do that...but its about HMRC which can cause some issue...ask your accountant he will be able to tell you...

redbull.lion · Post by **redbull.lion** » Thu Aug 16, 2012 10:21 am

Hi scorpio_besal...

I am in also in a same situation. When i asked my accountant he told me as i am Director of a LTD company and only taking DIVIDENDs not salary hence as per HMRC guidelines i do not have to pay class 2 NI as i am paying Corporation Tax.

I was also got confused after reading few posts on the forum. see the link below it clearly shows that if you operate as LTD company structure then you do not need to pay class 2 or class 4 NI where as you have to pay if you are registered as Sole Trader.

http://www.whitingandpartners.co.uk/con ... arison.htm

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 12:53 pm

Thanks buddy..

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 3:32 pm

Thank you Gaurav, I thought over this, I am now sure that I would stay as Sole Trader for the time being, after getting my extension approved then only I would think about changing it to a LTD Company.

Gaurav, If I am operation as Sole trader, I earn say about 16K, on that amount I am assuming with 20% tax , it would be about 3200GBP and 9% NI insurance class 4, say about everything included around 5K.

DO I NEED TO KEEP 5K GBP BALANCE in my business bank account, at the time time of preparation of documentation from the accountant for the extension.

Is it important at the time of preparing the P& L accounts and balance sheet etc to keep the 5K balance in the account which I have to pay to HMRC.

gaurav76.5 · Post by **gaurav76.5** » Thu Aug 16, 2012 3:51 pm

depends on when you are applying and when you are suppose to file the return...

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 3:55 pm

Thank you Gaurav for your quick response.

I would be applying for extension in Feb 2013, I would be claiming the points for the period , May 2012 to Feb 2013 for my earnings as sole trader.

I believe the return needs to be filled after 06 April 2013.

Do when, I would be going for the extention, do I need to keep the balance of 5K which would be for tax and class 4 NI for my earning of 16K for that period, at the time of visa application.

gaurav76.5 · Post by **gaurav76.5** » Thu Aug 16, 2012 4:24 pm

you dont need to..but make sure until that date( till Jan 2013 your tax and NI contribution are up to date)

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 4:39 pm

Thanks Gaurav, When you say TAX , are you refering to my employment income or self employment income as sole trader , if its the later then , If I am not wrong, I can only pay the tax after 06 of April 2013 as a sole trader Is there any way of paying the tax before that.

And I believe that the class 4 national insurance is also paid along with the tax at the end of financial year.

The only thing which I have been paying all this while, is my national insurance class 2 payment.

so do you think, that I would have to keep the balance of 5K which I am due for next year in april-may 2013, at the time of extension while I am preparing my documents through my accountant , as I am due for renewal in Mar 2013, so I would be going for an extension by end of FEB 2013.

gaurav76.5 · Post by **gaurav76.5** » Thu Aug 16, 2012 5:10 pm

tax on income from employment as sole trader....you can pay the tax anytime you want..

scorpio_besal · Post by **scorpio_besal** » Thu Aug 16, 2012 5:50 pm

Thank you so much Gaurav, you have been extremely helpful Gaurav.

I called up the HMRC, spoke to two different people, in the HMRC Self Assessment Payment Line, to pay my income tax on my self employed income from 06 april 2012 until today, they said, that I dont owe them anything as per my UTR statement, I am all up to date for my previous years self assessment 2011-12.

She mentioned if I wish to pay anything for this current financial year, I would have to wait for the self assesment after april 05 2013.

What would you suggest.

gaurav76.5 · Post by **gaurav76.5** » Fri Aug 17, 2012 9:47 am

that gr8 atleast you now know what to do....

scorpio_besal · Post by **scorpio_besal** » Fri Aug 17, 2012 10:47 am

So I believe , I just have to wait until next year to submit the tax due to HMRC.

Regarding the extension, would I need to ask my accountant include my due amount to HMRC in the letter , which includes class 4 and income tax amount.

Or is it understood by UKBA, when my accountant would show the net profit for the period of Mar2012-Feb2013, that I would have to pay that much at the end of financial year.

gaurav76.5 · Post by **gaurav76.5** » Fri Aug 17, 2012 10:55 am

yes you would need to wait....

Regarding accountant lwtter just ask him to show the net profit no need of mentioning how much tax is due etc....you dont need to tell everything to the IDIOTS sitting there as they can start fooling around

pyke · Post by **pyke** » Sat Aug 18, 2012 9:56 pm

include my due amount to HMRC in the letter , which includes class 4 and income tax amount.

I agree with gaurav, you really shouldn't include that.

rainbow123 · Post by **rainbow123** » Sat Aug 18, 2012 11:56 pm

Hi

In one of the posts on this thread, scorpio_besal mentioned (aug 16 8:10 am)

"I would only have to pay 10% tax on dividends but that would be credited back as its not more than 35K."

I understand the tax on dividend is counted while calculating the total earning that I show to UKBA. But from the above statement it seems there is some 35K limit ???

Can some one clarify if there is any such limit.

To put it in other words, I am drawing a dividend amount of 38 K, so will I still be able to consider the tax on dividend in my total earnings calculation ?

Thanks.

pyke · Post by **pyke** » Sun Nov 11, 2012 5:16 pm

rainbow123 wrote:dividend in my total earnings calculation ?

Yes.

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Salary and dividend structures?