The area of salary levels versus dividend income is increasingly being seen as one of the next areas that HMRC will focus in on.

It is a widely held view that, as a result of the economic downturn, tax rates will increase in the future. It is also clear that HMRC are pursing any strategy that they feel is designed purely to reduce the tax revenues received in to the exchequer.

Whilst technically there are no requirements to even pay a salary, although there are good reasons why you would not go to this extreme, it is essential that salary and dividends are seen separately and there are steps you can take that will significantly reduce your risk of a potential challenge in the future.