Salary and dividend structures?

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?