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Weakened wage

24 November 2009
Issue: 4233 / Categories: Forum & Feedback , Income Tax
Family businesses often pay low levels of remuneration that are supplemented by dividends, because this will mitigate National Insurance liabilities

I am a little concerned with regards to some of my family businesses that trade as limited companies. I do not believe that IR35 is an issue but am worried about their remuneration levels.

For the past few years the directors have been paying themselves between the lower earnings limit and the earnings threshold. They are therefore maintaining a contributions record for no cost. The balance of their ‘remuneration’ is taken as dividends.

Is this safe or is this practice storing up potential problems for the future; either from a National Insurance tax or national minimum wage angle?

I would appreciate advice here.

Query 17 511 – Worried

Reply from Bernie

There was considerable alarm when ITEPA 2003 s 447 was added to the statute book. This section like Social Security (Contributions) Regulations SI 2001 No 1004 Reg 30 provides...

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