About Our Director Salaries and Dividends

Skyfall : Once a limited company is incorporated, it is a legal requirement of HMRC that the company files a corporate tax return every year. This means that:

• Directors salaries
• Dividends (in the case where the director is also a shareholder)
• Any combination of the two

I don’t mean to scare you with the “Skyfall” reference, but how you choose to take your earnings (i.e. what proportion you take as salary vs dividends) has a significant impact on how much you’ll pay in taxes and what your take-home earnings will be.

Let’s say you earn £50,000 per year. You can take home a net income of as much as £47,337.50 or as little as £37,536, depending on what proportion of your earnings you take as a salary vs. what proportion you draw as dividends.

Now you see why it’s potentially a skyfall, and makes all the difference if directors aren’t paid in the most tax effective way.

And that’s exactly where our team’s expertise comes in! Contact us anytime for advice about the optimal salary vs. dividends split for your specific circumstances.

For further information about our bookkeeping services please visit the FAQs section.