No longer building

We have been acting for a family building company for a number of years. The building activities will cease on 31 March 2015 and the company will continue operating as a property investment business. It will receive rental income on properties that it has owned for the past five years.

The four family members are directors and they own the issued share capital equally. Because of the change in business activities we are considering the tax implications. Are we correct in assuming that directors’ salaries can continue to be paid by the company along with dividends?

Also are there any particular matters we should consider that may affect the tax situation relating to the directors and the company?

Query 18 571 – Cautious

Reply from Cello Boy

Payment of dividends is governed by Companies Act 2006 Part 23 and they can be paid as long...