Originally posted by Drei
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Best salary for 2017/18
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Originally posted by TheCyclingProgrammer View PostThat has already been answered in this thread.
@Luisa thanks for the answer and explanation.Comment
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Originally posted by Drei View PostActually no one has properly. I think I was the only one that provided some kind of calculation. At the end of the day you still want to pay some NI Contribution as you want your state pension to carry on.
Edit: The reason to exceed £8164 is if you have two employees, to do it with both, to give eligibility for employment allowance. In that case, the optimal is £11,500 -- you pay no employer NI, you do pay employee NI, but you save corporation tax. Since the CT rate is higher than employee NI, this is worth it and you should pay both employees £11,500.Last edited by WordIsBond; 15 May 2017, 16:58.Comment
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Originally posted by Drei View PostActually no one has properly. I think I was the only one that provided some kind of calculation. At the end of the day you still want to pay some NI Contribution as you want your state pension to carry on.
If you are the sole employee through your company, I'd recommend £8,164 per annum, then dividends thereafter.
Optimum Directors Salary and Dividends 2017/18 - JF Financial : Online AccountantsComment
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Originally posted by WordIsBond View PostNot true. You get state pension eligibility if your annual earnings exceed the LEL, which for this year is £5880, even if you don't pay any NICs.
Edit: The reason to exceed £8164 is if you have two employees, to do it with both, to give eligibility for employment allowance. In that case, the optimal is £11,500 -- you pay no employer NI, you do pay employee NI, but you save corporation tax. Since the CT rate is higher than employee NI, this is worth it and you should pay both employees £11,500.
If the income above £8,164 is subject to 20% tax as well as 12% Employees NI, this will be more expensive than the dividend route (19% CT + 7.5% dividend tax).
It's generally only worth paying either employee more than £8,164 if this income also falls within the £11,500 personal allowance.Comment
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Originally posted by EinsteinTax View PostOne other point to consider is that if the second employee has another source of income it might be better to limit salary to £8,164.
If the income above £8,164 is subject to 20% tax as well as 12% Employees NI, this will be more expensive than the dividend route (19% CT + 7.5% dividend tax).
It's generally only worth paying either employee more than £8,164 if this income also falls within the £11,500 personal allowance.
Once you start to talk about other income, you probably need to start running specific numbers with specific scenarios, and perhaps pay for advice.Comment
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