Salary vs Take-Home for Directors

[Russinating]

I've always been a bit befuddled by this and I always forget to ask our accountant because it doesn't really matter.

However when applying for a credit card, or a mortgage, your "salary" is of particular importance. However how does this work when the bulk of your pay is dividends etc?

For example, a director/contractor with salary of £11,850 and dividends of £50,000 (combined £61,850 salary) has a take-home after tax of £53,963.

A regular employee on a salary of £79,000 will have a take-home after tax of £53,835.

So on paper they get paid £17,000 more a year, but have the same take-home (which for a credit card or mortgage etc is what matters). They could technically get a larger mortgage, or a higher credit allowance, despite there being no difference in disposable.

 

[Russinating]

I always put my companies' annual income as my salary. I've never had any issues borrowing money except for mortgages, where I use an IFA who deals with lenders who are used to contractors. They either want my day rate or my previous three years profits.

That's much easier and makes a lot more sense when you're the only shareholder (like contractors), but I'm not.