Remuneration Strategy

As a Shareholding Director of your Limited company, you have the capacity to determine your own Remuneration strategy within the guidelines set out by Companies House and HMRC.

The introduction of IR35 rules places the emphasis on how you distribute and remunerate yourself on the basis and nature of your work. Decisions on IR35 status are legal matters and, not being lawyers, we are only able to give general advice.

Individual circumstances vary and it is also quite possible to have an IR35 contract or a non-IR35 contract running simultaneously or separately in the same tax year.

Depending on your IR35 classification, you will have the choice in how you remunerate yourself as follows.

Non IR35

  • Salary
  • Dividends
  • Pension
  • Retained profit
  • Transfer of shareholding

IR35

  • Salary
  • Pension

Each one of these options has a different taxation and benefit consequence.

IR35 basis

You have little choice in how you remunerate yourself within IR35 earnings as 95% of these must be distributed as income, less certain expenses, to the person who earned it as salary. Notwithstanding this, Pension contributions can be made and may receive full corporation tax relief if contributions are applied appropriately.

Non IR35 basis

You have greater scope in relation to Non IR35 earnings and within this space; you may choose any combination of the above.