tax-free directors salary

[TheFaQQer]

After reading all these comments, I am wondering why my accountant is advising for £12k salary per annum instead of “tax code value”?

My Accountant's view is, paying 12K will cover national minimum wage.

You've just answered the first question.

Is this necessary?

No, unless you are an employee.

Secondly, Paying no NI means I am not eligible for state benefits or sick pay etc (In case if I need to claim)?

Correct.

Hence I should pay 12K instead of tax code value.

No - you should pay at least the threshold to get the the NI stamp. If you read this thread, you're better off paying £7072 so that you don't pay income tax, but reduce your corporation tax liability. Also in this thread, is a debate about whether to pay £7225 instead of the recommended £7072.

What are your views please?

You need to do some more reading.

[Contreras]

I take salary as an annual lump sum and unless I'm mistaken there isn't really any extra effort required to paying £7225 vs. £7072.

The company pays me £7225 and then makes an online bank transfer of £21.11 to HMRC's account.

And that's it?...

There is no "quarterly PAYE return" to file as such, even if I was taking salary monthly - just pay what is owed. Well I suppose the other difference is that I don't need to remember to file a nil return to avoid the HMRC nastygram about no PAYE paid that month.

I'm using the HMRC Basic PAYE Tools (what used to be PAYE CD-ROM) to file the end of year P35/P14 online.

[kingcook]

There is no "quarterly PAYE return" to file as such, even if I was taking salary monthly - just pay what is owed. Well I suppose the other difference is that I don't need to remember to file a nil return to avoid the HMRC nastygram about no PAYE paid that month.

You will have to submitted a NIL monthly or quarterly PAYE return. I didn't bother for 6 months, then got a letter from HMRC asking why i hadn't submitted any returns.

[Contreras]

You will have to submitted a NIL monthly or quarterly PAYE return. I didn't bother for 6 months, then got a letter from HMRC asking why i hadn't submitted any returns.

Yes I get the nastygrams too. Don't have one to hand but I believe the context is that you haven't made any PAYE payments, rather than not filed a return.

Point being that in the month where you trip over the £7072 threshold it's just a case of transfering the owed PAYE (e.g. £21.11 for a salary of £7225) into HMRC's account, and then having made a payment there isn't any PAYE return to file (NIL or otherwise) for that month.

Quite simple really... unless I'm missing something.

[rrp]

I've read through this thread due to a recent change in accountant suggesting different things

Accountant 1 suggested a salary of around 7.5k per year, meaning I was liable to a little NI payments.
Accountant 2 tells me to take a salary of £7072 as this will incur no personal NI but still provide an NI 'stamp'.

I think this is exactly what this thread states as well, although there is some debate going on.

Currently I am sticking to Accountant 2 suggestion - anyone think this is wrong and I won't qualify for 'stamp'??

Obviously figures will change after April.