Deferring directors salary to reinvest in ltd co

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Deferring directors salary to reinvest in ltd co

Postby patrots269 » Sun Jun 20, 2010 4:31 am

If a director was defer their salary from a ltd co to reinvest in hard times and improve cashflow am i right in thinking that they will not pay income tax until the salary leaves the company and it will just accumulate in their current a/c. I know they will lose their personal allowance, so is there a way to accumulate their personal allowance to a later date. Is it also possible to take it as dividends if the other directors take it as salary.

Many thanks
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Re: Deferring directors salary to reinvest in ltd co

Postby andrewr » Wed Jun 23, 2010 1:57 am

They have to pay tax if the cash leaves the company or not, assuming they're over their PA. The net salary sits as a creditor in the loan account to be paid whenever they wish.

The best way would be to have a salary up to the PA, paying just a small amount of NI.

Shareholders can choose not to take a dividend while other shareholders do but I don't see it often. When this happens there should be a letter from the shareholder not taking the dividend, stating he/she is waiving their dividend on 'date'.
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Re: Deferring directors salary to reinvest in ltd co

Postby patrots269 » Wed Jun 23, 2010 3:58 am

Thanks for your help acca-member
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