If you are a director of a limited company, you usually have the option of paying yourself a salary or dividends.
Until recently generally there was a clear answer: pay yourself a salary up to the National Insurance contributions lower earnings limit and the rest would be paid as dividends. This would give you the best position from both a company and a personal tax point of view.
However, Charles Nops, Manager in the Private Client Department, explains how recent changes to Corporation and Dividend tax rates mean that the answer is no longer clear cut. Now it all depends on your individual circumstances.
The scenarios that will change the position include:
There are other non-tax related circumstances that you will need to consider:
You may also want to consider the benefits of operating self-employed/via a partnership, as these may be more effective.
If you would like to discuss specific circumstances, please get in touch.