Short term Ltd Company Questions

[dsmithuk]

Hi All,

Would appreciate any small advice here.

My situation: Registered Ltd, basically to get a piece of short term buy/resale which became available (only plan to keep company for 6-12mths). Ltd company and VAT reg was essential due to to requirements of clients and VAT reg for reclaim of import duties levied. I have around 16k cash which could be extracted shortly. Whilst most paperwork is in order, efforts were focussed on the buying/selling piece and not the extraction part.

What are my options for extracting money here? PAYE or Dividend seem to be the options. Is there a way of bypassing any of the paperwork associated with PAYE? I ask because the tax year is up shortly and my wife could basically receive 6k tax free this year (full personal allowance). I dont fancy our chances of PAYE registration, and payroll within 1wk.

thanks a lot in advance,

dave.

[dsmithuk]

hi all,

I have found this:
hmrc.gov.uk/paye/intro/register.htm#1

..so it seems I can pay below LEL and pay dividend.?

Next question: Company has operated since end January, can I pay a lump sum "bonus/commission" to bring her to around 4k in this tax year (company operated 2mths)?

thanks in advance.

[Tom McClelland]

If you pay someone through the PAYE system you can pay them up to the personal allowance without them being liable to tax, but above the monthly NI Earnings Threshold (less than £500) (or the quarterly limit if the employee is paid quarterly) they would still be liable for 11% NI and the company would be liable for 12.8% employers NI.

If they are a director NI is calculated on an annual basis BUT that is pro-rata'd according to the date that the employee became a director. So half the PAYE year of being a director would entitle the employee to half a year's NI threshold, and so on.

EDIT: I note that in your case the company has only been operating for a couple of months, so the maximum NI free payment would be about 1/6 of the annual earnings threshold. Above that the effective NI "tax" rate is about 22%.

[dsmithuk]

thankyou for your help. the edit in particular was especially appreciated.

best regards , dave.