If the sole shareholder and director of a small trading company currently takes £50k as salary decides to reduce this to a salary of £5715 ( NIC threshold) and then take dividends in future are there any problems with this approach as it will give a saving in tax and NIC of around £8k pa ?
As owner managed then no formal contract of employment exists and presumably no salary sacrifice issues nor minimum wage issues to be concerned about.
If company makes the pension contributions then no need for salary to justify personal contributions and unless need a high salary to support a mortgage application then is there any downside in the change ?
£5,715 will qualify for State second pension but is there any other benefits that may not qualify for if not actually paid any NIC as just beneath the threshold ?
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