Director Salary Optimisation 20 October 2021 at 11:10AM in Small biz MoneySaving 2 replies 191 views

kaltd

Our situation:
Husband and wife, both directors, both 50% owners. Our startup now has income and we want to start withdrawing.
Wife has no income this year
Husband has 30k taxable from previous job

1. From what I've read, we get employers allowance on NI up to 4k (is this corrrect?)
2. This ^^ means optimal salary is using all the 12570 allowance. Is that still true now that we're half way through the tax year? So do we pay more like 2k/month for the rest of the year or stick with 1k?
3. For the husband, is it worth taking any salary this year at all? Would be taxed at 20% income tax. Would he pay employee NI - I've heard directors NI is paid annually, but how does that interact with his 30k earned and some amount of NI paid as an employee in another company?
4. Should we take dividends this year (before declaring any profit). There's the 2k allowance that might be beneficial to use if allowed.

Thanks in advance

gingerdad

Speak to an accountant would be the best option

Sandtree

Speak to an accountant and consider your longer term plans for the business, pensions etc.

Its fine to try and minimise your income, though you are then paying corporation tax, but there needs to be a plan of what you'll do with the profits retained in the company