Some things:

- watch your IR35 status. HMRC are routinely wrong about IR35 which is why they keep losing cases. However this doesn't mean you don't have to worry about it: you need to be sure you are the right side of the line (just don't use their online status tool - it's demonstrably wrong, as confirmed by numerous cases)

- you can take up to £2k dividends each free of tax, once you've paid CT.

- by taking more as dividends you don't have to pay e/er NICs - this is the saving over PAYE

- by splitting shares/divs between self and wife you get to use both of your allowances up. HMRC used to challenge this kind of thing. They got creamed in the CoA and the Lords (as then was), and rightly so.

- optimal salary is either £8788 or £12500 depending if you can claim EA for your spouse's employment or not.

- bottom line: don't take the piss, get some kind of IR35 representation insurance (loads of places do it: IPSE, Qdos, Kingsmill etc), make sure you really are the right side of the IR35 line, only claim expenses which are genuine expenses, don't participate in any dodgy tax schemes.

Government thinking around self employment is muddled and self-contradictory. Reform of the system is badly needed (and indeed the system for employment rights - IR35 says you can be taxed as an employee but accrue none of the concomitant employment rights, which is simply wrong, you should be either one thing or the other, not one thing for tax purposes and another for rights purposes...but I digress...).

Posted By: Old Man on May 19th 2020 at 17:22:10

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