Ltd company increasing monthly pay?

garybarlowsbeard

Hi

Am I right in thinking I can increase pay from £641 to £833pm and be better off overall due to increases in PAYE/NI/NI employers/ees allowances?

There are two of us who own the company equally and take most pay as dividends.

Cheers
GBB

leveller2911

Ask your accountant.......

nickj_2

i;ve just got an email from my accountant stating that i would be better off , it's not much , think it was around £150ish x2 for me and mrs j , it's whther you can be bothered with the extra hassle of paying nat ins quaterly


[FONT=&quot]pay the full personal allowance of £10k (so £833.33 per month), there will be employee NI to pay over to HMRC each quarter but because of the £2k NI allowance no employers NI;[/FONT]· [FONT=&quot]or the usual salary with no NI which for 14/15 is £7,956 (£663 per month). [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]There is a tax advantage worth £163 each using option 1 [/FONT]

danthemoneysavingman

your accountant should've contacted you about this by now.
You wouldn't be better off if you pay yourself over £150K I believe, but they can advise best

missile

nickj wrote: »

i;ve just got an email from my accountant stating that i would be better off , it's not much , think it was around £150ish x2 for me and mrs j , it's whther you can be bothered with the extra hassle of paying nat ins quaterly


[FONT=&quot]pay the full personal allowance of £10k (so £833.33 per month), there will be employee NI to pay over to HMRC each quarter but because of the £2k NI allowance no employers NI;[/FONT]· [FONT=&quot]or the usual salary with no NI which for 14/15 is £7,956 (£663 per month). [/FONT]

[FONT=&quot]There is a tax advantage worth £163 each using option 1 [/FONT]

Hi nickj,


That was a great post.


My tax code is 673T. Would I be correct in thinking £561/month to avoid paying tax and NHI?

nickj_2

missile wrote: »

Hi nickj,


That was a great post.


My tax code is 673T. Would I be correct in thinking £561/month to avoid paying tax and NHI?

you can take £633 p/m month without tax or NI afaik, check with you accountant

trailingspouse

Until the end of the 2013/14 tax year (ie for another 3 days) it is £641 per month to avoid both tax and NI. Next year the rules are more complicated - as leveller said, talk to your accountant, as what might be appropriate for one person's circumstances might not be appropriate for someone else.

missile

I thought I would pay tax on salary above my tax code?

nickj_2

[FONT=Arial, sans-serif]As a director and shareholder of your own company you can decide how much salary to pay yourself each month in order to use your tax-free personal allowance in the most tax efficient way. Any further funds you need can be extracted as a dividend if the company is making a profit.

If you are a director of your company and you don't have a contract that sets out terms of employment with the company, you don't have to pay yourself the national minimum wage. So how much should you pay yourself?

For 2014/15 if you were born after 5 April 1948 you have a tax free personal allowance of £833 per month (£10,000 per year). You could take a salary at that level and pay no income tax, assuming you have no other taxable benefits from the company such as a car.

However, you will pay national insurance (NICs) on that salary as the NICs threshold is only £663 per month. From a gross salary of £833 the company must deduct NI of £20.40 and set-aside employer's NI of £23.46 on top. The company will have an employment allowance of £2,000 for the year to set against its employer's NI due on all its employees, so it won't have to pay over employer's NI until that £2000 is used up.

If you take a salary of just above the NI lower earnings threshold of £481 per month, you will get an NI credit towards your state pension, but you don't pay any tax or NI. However, at that annual salary level (£5,772) you will be "wasting" £4,228 of your tax free personal allowance, unless you have other income to cover it.[/FONT]

missile

That is what I am doing, I think <LOL>

CKhalvashi

for 14/15, £10k salary plus dividend should be most tax efficient for those earning less than £100k through a Ltd.

As above, speak to an accountant, as whilst this is my interpretation, it may not be correct.

CK