Thanks for your answer and for developing in details as much as you could.
I am having difficulties to understand how it all works, and am still confused to whether or nor I should take the avenue of being paid via dividends.
I guess i would like to be clarified, (giving the figures i have exposed), with a comparison of what financial gain i would get, if i was paid via dividends, compare to what i earn now, through business and employment.?
If you could do a simplified description of how this would work, i'd be grateful.
I cannot tell you what you should do as different people have different priorities. Some prefer a larger salary so they can pension it. Some aren't bothered about pension provision and just want to pay as little tax and national insurance contributions as possible. I'll give you some comparisons so you have something to consider:£30,000 SALARY & £15,000 SELF-EMPLOYMENT PROFITIncome tax on salary £4,112Employee NIC on salary £2,670Employer NIC on salary £3,078It costs your company £33,078 to employ you and it saves corporation tax of £6,616 (20%) so the net cost to your employer is £26,462.The tax on your self-employment income is £3,710 and the Class 4 NIC is £652.The total tax and NIC paid by you personally would be £11,144.£30,000 DIVIDEND AND £15,000 SELF-EMPLOYMENT PROFITTax on self-employment income £1,112Class 4 NIC on self-employment income £652Higher rate tax on gross dividend of £33,333 £1,549You would pay tax of £2,661 and NIC of £652 on an income of £48,333 (£45,000 net of 10% tax credit on dividend).The total tax and NIC paid by you personally would be £3,313.Because a dividend is not a tax deductible expense for the company whereas salary is, the company's corporation tax liability would be increased by £2,922 (£6,000 lost corporation tax saving on salary - £3,078 employer NIC saving) as a result of paying you a dividend of £30,000 instead of salary.Of course, as you are only a 10% shareholder, any dividend paid to you has to be paid to other shareholders in proportion. My figures are based on your replacing your salary with a dividend but you could vary it between salary and dividend. In addition,dividends are not guaranteed and the major company shareholders may choose to pay no dividends or low dividends in any year.