Any limit in Dividends

[Rajuk09]

Hi All,
I am a director of limited company doing contracting.Just want to know if there is any limitation on drawing dividends ? because I am not meeting the salary requirements as per Tier 1 switch.So this will be a problem in applying for ILR. Thinking of withdrawing dividends to meet the amount needed to match the salary while I applied for Tier 1 switch.Please clarify.
Kind regards
Raj

[Cazz10]

I'm also a contractor working through a limited company of which I am the sole director.

I get paid weekly by the bank I currently provide my services to. My accountant tells me how much I can transfer accross from my business bank acct to my personal bank acct each week based on the amount I invoice the bank for. My accountant has prepared payslips and dividend vouchers which can be cross referenced against my business bank statements and personal bank statements. Not sure whether what you are proposing will be acceptable to the home office. It sounds like what you are proposing is to transact drawings... which would not be taken into consideration. Sounds like a question for your accountant.

[Cazz10]

Also, when will you be applying for your ILTR?

[Rajuk09]

Also, when will you be applying for your ILTR?

In Dec 2012

[Cazz10]

I'm a bit confused as to why you are not already utilising your limited company and deriving your income from both gross salary and dividends? If your income is solely derived from salary, surely you are paying a higher rate of tax which defeats the purpose of having a limited company in the first place?

[Rajuk09]

I'm a bit confused as to why you are not already utilising your limited company and deriving your income from both gross salary and dividends? If your income is solely derived from salary, surely you are paying a higher rate of tax which defeats the purpose of having a limited company in the first place?

Sorry may be my query was not clear.I use to get dividends,but for 6 months I was on and off contracts and didn't do much business, though I was getting salary from my limited company.I did not get dividends,as not enough money coming to company.Currently I am on a good contract and thought I can get enough dividends and by which I can add Sal + dividends which will meet the requirements ?

[Cazz10]

So you continued to draw a salary whilst between contracts? Ok.

The Home Office will calculate your income based on gross salary plus dividends, so if you can start drawing dividends it would be in your interests to do so. From an income evidence perspective, you want to try and link in your personal/business bank statements to the amounts you are transferring across to you personal account. That way you will have another strong source of income evidence. Home Office likes bank statements - they are more difficult to forge.

Also bear in mind you have a 15 month window from which you can choose 12 consequtive months, so this may assist you as well.

[Rajuk09]

So you continued to draw a salary whilst between contracts? Ok.

The Home Office will calculate your income based on gross salary plus dividends, so if you can start drawing dividends it would be in your interests to do so. From an income evidence perspective, you want to try and link in your personal/business bank statements to the amounts you are transferring across to you personal account. That way you will have another strong source of income evidence. Home Office likes bank statements - they are more difficult to forge.

Also bear in mind you have a 15 month window from which you can choose 12 consequtive months, so this may assist you as well.

Thank you very much mate.Yes I understand about gross sal +div .And I can link between business and personal bank statements.Bec I have the references in each transfer ,clearly stating Sal for which month and Dividend.So it should be quite easy to link with these.I understand about 15 months window,just that I am looking what will be the best 12 months to take,and still looking in to the figures.
Another question which I raised earlier too,is My salary I reduced slightly so that during the odd months(betwee contracts) , it wont be a burden or should not stop me getting salary.So a change has been done in sal and didnt pay NI (for 3 months),but did payed Taxes ,now thinking of increasing it again , just to support the needed figure for ILR, and also will pay NI. Do u think this increase and decrease on sal will cause issues? or not paying NI for say 6 months will be an issue ?

[Cazz10]

I wouldn't have thought Home Office would be looking into NI payments... I would think that's similar to someone being worred about being behind in in paying their taxes. I doubt Home Office dig into those details that much.