LTD Co Director

[batmanreturns]

What is the best way to do things from a tax perspective if i wish to take an extra £500pcm from the company.

Would increasing dividends be best or classing it as a 'car allowance' or similar be best? I'm not sure what is the best way from a tax perspective.
thanks

[Eric Mc]

There is no "best" way.

Have you asked your accountant?

There are various ways that may be best for you. Your accountant is the person who should be able to give you advice tailored to your specific circumstances.

[batmanreturns]

Thanks Eric. Will do but i wanted to gauge things first as every time i call them i get a bill!

[Eric Mc]

Quite rightly too.

How are you currently accounting for income you draw from your company?

[TheHound]

Surely best way is by dividend. Car allowance will be classed as a BIK and attract higher tax rate and not have the benefit of the Dividend tax credit.

However, as has already been advised speak with your accountant as they will know your actual situation.

[Eric Mc]

TheHound said:

Surely best way is by dividend. Car allowance will be classed as a BIK and attract higher tax rate and not have the benefit of the Dividend tax credit.

However, as has already been advised speak with your accountant as they will know your actual situation.

SOME salary is also a good thing - so taking all the money out as a dividend could be quite stupid.

Dividends aren't always advisable or even possible. Before any advice can be given, a better understanding of the OP's personal and business situation is needed.

[TheHound]

Eric Mc said:

SOME salary is also a good thing - so taking all the money out as a dividend could be quite stupid.

Dividends aren't always advisable or even possible. Before any advice can be given, a better understanding of the OP's personal and business situation is needed.

I think we are generally in agreement (I was assuming, rightly or wrongly, he would already be taking some salary to get his NI stamp and that the company had enough in the pot to support additional dividends). Taking it as a car allowance would not be a sensible thing.

[Eric Mc]

That's why I said we would need to know a lot more about his circumstances before being able to offer any meaningful advice.