A close company which prepares accounts to 31 March each year is owned and managed by a single shareholder/director who is not a Scottish taxpayer and who is paid a salary of £6,000 per month. In addition to this salary, the owner intends to withdraw £20,000 from the company on 31 March 2024. Two approaches are being considered:

(a) that the company should make an extra salary payment to the owner, such that the total of this payment and the related secondary NICs will equal £20,000

(b) that the company should instead pay a dividend to the owner, such that the total of this dividend and the company's extra corporation tax liability (when compared with the other approach) will equal £20,000.

Consider the tax-effectiveness of each approach, showing separately the situation that will apply if the company's marginal rate of corporation tax is 19%, 25% or 26.5%. Perform all calculations to the nearest £ and assume that the owner has no other sources of income.