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    Default tax-free directors salary

    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

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    Depends on your tax code ..

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

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    Quote Originally Posted by ba55meister View Post
    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.
    2012 CUK Reader Awards - '...Capital City Accountancy, all of whom were outside the top three yet still won compliments from CUK readers for their services' - well, its not an award, but we'll take it! - Best Accountant (for IT contractors) category
    2011 CUK Reader Awards - Top 3 - Best Accountant (for IT contractors) category
    || Check us out at: http://www.linkedin.com/company/capi...ccountancy-ltd

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    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
    Last edited by ba55meister; 30th January 2012 at 22:26.

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    Quote Originally Posted by ba55meister View Post
    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.

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    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?

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    Quote Originally Posted by kingcook View Post
    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

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    Quote Originally Posted by Nixon Williams View Post
    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).

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    Currently 136 per week.
    I couldn't give two fornicators! Yes, really!

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    Quote Originally Posted by Kugel View Post
    I disagree. Most efficient salary is 7225 per year (or 602 per month).

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