Salary Or Dividend: Which Suits Your Needs Perfectly?

by Rahul V. Digital Marketing Company  If you operate your business through a limited company, then it can surely help you to lessen your tax bill. However, you have to plan the allowable expenses for limited company with great care. You have to create your remuneration package with great transparency. Now the question is, should you opt for salary, or dividend system to make the most for both you and your workers? A brief comparative study might help you.

 

The Salary Question

 

You will have to register the salary details of any person to the HMRC or HM Revenue & Customs if his or her payment amount exceeds the Lower Earning Limit. Currently, it is fixed at £109 per week. You have to send your online reports to HMRC even if you do not make any payment to an employee on any given month. Both the employer and salaried employee need to pay income tax and insurance charges. However, the bonuses, salaries and the amount involved in National insurance help to deduct tax for your company. A reliable online tax advice Service in London can offer you all the help you need to understand this in details.

 

About Offering Dividends

 

Simply put, dividends refer to the amount that you can pay out of the post-corporation revenue profit you enjoy. You, along with your directors, can decide on the time or level of dividend. Your directors, as well as your shareholders can benefit from it. As an owner of a well-known online tax advice service directs, opting for dividends can be somewhat advantageous. You will need to pay lesser than the standard rate of income tax. Plus, you will not need to pay for National Insurance.

 

Comparing The Choices

 

Both dividends and salaries come with their share of advantages. However, when it comes to think deeper about the Salary vs dividend question, then there are certain things that you need to think about. As a shareholder, you can manage considerable savings, both personally and professionally by taking dividends instead of salary. If you are married, then you have the additional advantage of slashing down your tax liability. You can make it by making use of your spouse’s position. If you accept salary, then you will need to pay for National insurance and income tax. However, this will help you save on corporation tax payment. As per the present regulations, as a director you can enjoy a tax-free dividend of up to £30,890, if you receive a salary of £8,060 or less. However, this is subjected to all your income details. Consult a professional to get more assistance in this regard.

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Created on Nov 1st 2017 05:15. Viewed 417 times.

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