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Ah, my apologies. I got you mixed up with the parent comment poster. To explain anyway: As a contractor with a limited company, I have two options when it come

Ah, my apologies. I got you mixed up with the parent comment poster. To explain anyway: As a contractor with a limited company, I have two options when it comes to moving money from my company to my personal account. 1) Set my salary to be the same amount as the money I've earned from contracting, thus paying the same amount of tax as a "regular" PAYE employee who works full time 2) Set my salary to be minimum wage and pay everything left in my company account as a dividend, resulting in paying less tax. My point is that option number 2 is "tax avoidance exploiting legal loophole" or "sensible tax practice" depending on how you want to frame it. Businesses will use whatever legal options they have to pay the least amount of tax, including small businesses (although small businesses might not even consider that they're already doing it).

Swinx43 9y ago
But have you done the calculation on option 2 to see what you will end up paying in tax (Both corporate as well as personal income tax) when you do pay out those dividends? You will realise that you have not "avoided" any tax really compared to a normal salaried employee due to not being able to reduce your corporation tax in the way other big organisations do. Accountants make it sound really good but when you get down to the actual tax being paid you are not saving much, if any given the new rules implemented in the last couple of years. Have a look at the example that I have shown as a reply to your parent comment. I would be very interested to hear your take on this.