tax-free directors salary

[ba55meister]

Sorry that question has probalbly been done to death here.

What is the max salary I can pay myself as a director to avoid being taxed on it? is it £5304 or £7072?

thanks

[oversteer]

Depends on your tax code ..

ps do a search, 589/month probably, ask your accountant yadda yadda

[Greg@CapitalCity]

What is the max salary I can pay myself as a director to avoid being taxed on it? is it £5304 or £7072?
thanks

If you are looking at a ltd company salary purely in isolation, there are two types of tax to consider;
(1) Tax (PAYE) - Tax will arise on a salary above the personal allowance, which for this year is £7,475
(2) National Insurance (NIC) - Employers NI contributions arise on a salary above £7,072

A lot of contractors will pay themselves a salary of around £589 per month to keep below the NI threshold, but what you do will depend on your specific circumstances. Your accountant will be able to talk this through with you.

[ba55meister]

yeah that's what i meant sorry (staying below NI threshold) and I mean an Ltd company director's salary

I intend to use crunch.co.uk as accountants, it's an online service. They suggest a £7072 salary to stay below NI threshold but I heard it can be as low as £5304

[Sockpuppet]

yeah that's what i meant sorry (staying below NI threshold) and I mean an Ltd company director's salary

I intend to use crunch.co.uk as accountants, it's an online service. They suggest a £7072 salary to stay below NI threshold but I heard it can be as low as £5304

Why would you want to stay below the NI band? Personally I pay myself a few hundred quid over the personal allowance. Pay around £100 then sit safe in the knowledge my NI stamp is paid. Same amount of paperwork as paying a few hundred quid less and trying to remember at what point the NI stamp gets paid.

[kingcook]

HM Revenue & Customs: Rates and thresholds for employers

See "Class 1 NICs: thresholds" section.

The point in paying yourself a basic salary of between £5304 (LEL) to £7072 (ST) is that you don't pay any NI, yet still get the stamp.

At least that's what i always thought?

[Nixon Williams]

HM Revenue & Customs: Rates and thresholds for employers

See "Class 1 NICs: thresholds" section.

The point in paying yourself a basic salary of between £5304 (LEL) to £7072 (ST) is that you don't pay any NI, yet still get the stamp.

At least that's what i always thought?

Correct, provided the salary exceeds the Lower Earnings Limit (LEL) of £5304 then the person 'earns' a year towards certain benefits, the main one being pension entitlement.

A salary of £7072 is currently the most efficient as your company will receive tax relief on the salary etc.

This level of salary can increase in April to £7,488 or £624 per month.

Alan

[Kugel]

A salary of £7072 is currently the most efficient as your company will receive tax relief on the salary etc.

I disagree. Most efficient salary is £7225 per year (or £602 per month).

[BolshieBastard]

Currently £136 per week.

[kingcook]

I disagree. Most efficient salary is £7225 per year (or £602 per month).