Interesting Tax query for you

[Hedgehog Toys]

I work full time as on contract through a composite company who classify me as a company director. This means that they pay me a minimum wage and then the rest of my salary consists of dividend payments.

Question is, now that i have registered as self-emplyed for the business how will this work out in terms of income tax. I will be continuing to work full time until such time as the business can afford to pay me enough to be able to go it alone.

Will i pay full rate income tax on all earnings from the business as my allowances are used on th full time job??? :wink:

[Joyous]

Your earnings from self employment will simply be added to your salary and your dividend income and taxed at your marginal rate. Your personal allowances are currently being used up in your employment so you'll be taxed on the full amount of any self employed profits.

This means that they pay me a minimum wage and then the rest of my salary consists of dividend payments.

Dividend income is not salary. If it was you'd have to suffer National Insurance on it as well as income tax.

Regards

Joy