Salary 22/23

[Lance]

yes I've asked the accountant and am waiting for an email. But she's on annual leave.

Any views on the approximate salary level for TY 22/23 based on LTD company, not going into 32.5% tax, a standard tax code, and nothing on the P11d?

The NI threshold increase has made me question it, particularly as the start of that is later in the year.
And I want to pay max (or close to) divis on 6th April to spend wisely (maybe not wisely but that's not the question).

[jamesbrown]

It depends what you mean. The secondary NI threshold is £758 per month for 2022/23, in case that helps.

[Maslins]

As with the last few years I don't think there's one universal "best" answer. However, our general suggestion is £992/month salary. There will be employER's NICs on this towards the end of the tax year, but shouldn't be any employEE's NICs. I appreciate some would suggest the lower salary where no NICs are payable at all. The lower salary is a little simpler (as no PAYE/NICs at all), but one we suggest marginally more tax efficient.

With £992/month salary and assuming no other personal income, you can take dividends of £38,366 to hit the top of the basic rate band, or £88,096 to stay just under £100k total (where you start to lose your personal allowance).

[Lance]

As with the last few years I don't think there's one universal "best" answer. However, our general suggestion is £992/month salary. There will be employER's NICs on this towards the end of the tax year, but shouldn't be any employEE's NICs. I appreciate some would suggest the lower salary where no NICs are payable at all. The lower salary is a little simpler (as no PAYE/NICs at all), but one we suggest marginally more tax efficient.

With £992/month salary and assuming no other personal income, you can take dividends of £38,366 to hit the top of the basic rate band, or £88,096 to stay just under £100k total (where you start to lose your personal allowance).

perfect. Thanks...

[ladymuck]

I thought, and I'm sure someone will correct me if I'm talking nonsense, that as directors can pay NIC on a cumulative basis you can do the £12k salary from April and not incur NIC?

I don't pay any NIC until month 8 usually as I've always gone up to base rate on salary.

[Kugel]

I thought, and I'm sure someone will correct me if I'm talking nonsense, that as directors can pay NIC on a cumulative basis you can do the £12k salary from April and not incur NIC?

Do not underestimate low-tax Chancellor. It is £11,908 for 2022/23 as specified in clause 4(2) of the National Insurance Contributions (Increase of Thresholds) Bill 2022.

[Maslins]

I thought, and I'm sure someone will correct me if I'm talking nonsense, that as directors can pay NIC on a cumulative basis you can do the £12k salary from April and not incur NIC?

I don't pay any NIC until month 8 usually as I've always gone up to base rate on salary.

It's only the threshold where employEE NICs kicks in that's being hiked. The threshold for employER's NICs is not getting a similar hike. So you certainly can pay £12k (and our £992/month suggestion is broadly in line with that), but there WILL be employer NICs payable on some of that. Ie so the situation you refer to for directors, where towards the latter part of the tax year it'll kick in.

[ladymuck]

It's only the threshold where employEE NICs kicks in that's being hiked. The threshold for employER's NICs is not getting a similar hike. So you certainly can pay £12k (and our £992/month suggestion is broadly in line with that), but there WILL be employer NICs payable on some of that. Ie so the situation you refer to for directors, where towards the latter part of the tax year it'll kick in.

I hadn't yet looked into the new rates in detail to see which elements were being tinkered with. That makes sense.

[JHamp82]

Do not underestimate low-tax Chancellor. It is £11,908 for 2022/23 as specified in clause 4(2) of the National Insurance Contributions (Increase of Thresholds) Bill 2022.

This is because changes are coming into force from 06/07/2022, the threshold is pro-rata threshold as far as I understand.

[PerfectStorm]

All good contractors will be using £11,908 for this year.