How will I get paid?
With a limited company the money does not belong to you personally but to the limited company, you would be paid a salary through the PAYE scheme and/or dividends from the profit after tax.
Should I pay myself in dividends?
By taking dividends your tax is usually lower. A dividend is a share of the company’s profits. If your company doesn’t make a profit you can’t get dividends. Dividends can be paid to directors and other shareholders, according to how many shares they hold. There is no requirement to pay all the profits as dividends, or even any of them. A company can keep its profits over the years and distribute them later.
The benefits of taking dividends.
- Dividends attract lower rates of income tax than salary
- No NICs are payable on dividends (neither employer’s nor employee’s)