Tier1 Extension - Contractor

[tulipz]

Hi all,
My husband is looking at moving into contracting (thorugh own limited company). Could senior members please advise?

1. For Example, if the extension is due Dec 2012. If his contract ends say in June 2012 and in the worst case scenario, he cant find work until december... can he contunue to pay himself dividends and show that for extension?

2. Again, in the worst case scenario, can my company (I have a ltd company) pay him a salary and use it for extension? I am on his dependent visa...

I know there are many contractors here who had successful extensions. Could you please share your plans for the worse case scenario? (for example : End of contract and extension application around the same time, or on bench while applying for extn...

Thanks,
Tulipz

[tulipz]

Inputs anyone

[mulderpf]

In terms of your first question, your husband doesn't have to pay himself in dividends. Whatever here earned for the year, would be included in his earnings (for a contractor you generally work on profit, not dividends - it's in his favour, as dividends are paid from profit anyway).

(To give you an example - if your husband earned £50,000 - he can claim the full amount for the first six months and doesn't have to pay himself out in little bits - either way, he will end up claiming the full amount).

In terms of you paying him a salary, unless he is providing you with a service and he is paying tax on the earnings he made from you, I don't see how it is possible or practical (he would need to invoice you etc etc). Essentially you will end up paying double tax and NI if you had to go down that route (I don't even know if it's legal).