National Minimum Wage or £97 pw?

[malvolio]

Said it before - bad record keeping, late or incorrect returns or marked changes in your SA year-on-year. Those seem to be the triggers.

Most of the arguments in favour of NMW seem to be from accountants who fear that future taxation changes for small businesses might be based on NMW as a break point - so being a cautious lot they suggest NMW so that you don't suddenly up your salary if that happens and wave a flag to Hector.

Lewis - didn't quite follow the question. PCG membership gives unconditional PEI insurance, PCGPlus gives unconditional PAYE review insurance. They take the view that back tax is unlikley if you have a proper contract and penalties almost impossible since you have acted in good faith. 1400 for and 3 against (and those 3 were several years ago now) suggests they may be right

[Lewis]

Lewis - didn't quite follow the question. PCG membership gives unconditional PEI insurance, PCGPlus gives unconditional PAYE review insurance. They take the view that back tax is unlikley if you have a proper contract and penalties almost impossible since you have acted in good faith. 1400 for and 3 against (and those 3 were several years ago now) suggests they may be right

I was just wondering if there are any restrictions on salary in the PCG policies. Obviously not or you would have mentioned it.

[Solidec]

Is it not 100 per week now?

I was of the understanding that with the NI thresholds changing for this tax year ('07/'08)I believe £100.48p pw gets you a full NI contribution tickbox and maxes out your tax free allowance of £5225

[malvolio]

I was just wondering if there are any restrictions on salary in the PCG policies. Obviously not or you would have mentioned it.

Nope, unconditional means exactly that. Makes you wonder why other people see the need for odd limitations, doesn't it...

[Lewis]

Nope, unconditional means exactly that. Makes you wonder why other people see the need for odd limitations, doesn't it...

I believe it only applies to the tax loss part of the cover (i.e. if they lose your case they pay all taxes, interest and penalties) and not the standard 'defence' fees, so it is the same as PCG in that respect. But yes I will ask why they insist on a salary above £9.5K for their tax loss insurance.

[THEPUMA]

My belief is that it is a higher excess via the back door. If you have paid yourself £10K salary, the amount of the claim payable under the insurance is £1,000 less.

Coincidentally, I was speaking to a very highly respected lecturer today who confirmed that she advises her clients to take £100 pw.

I've still not come across a single rational (in my opinion) argument for paying more, other than it invalidates your insurance cover.

[THEPUMA]

People on here still don't get it - including PUMA, so it seems.

...
So what are you left with to determine that your OMB is not being run for tax avoidance, but you can't realistically work out a market salary either?

The answer has to be what you need to work for to keep head above water for all basic living costs. That's the only factor that convinces me that I could hold me head high to a Tax Inspector should they carry out an investigation on my business.

Therefore, my market salary is based on what I need to cover my living expenses. Anything below that has to be a pointer to running your OMB as a tax avoidance vehicle.

Surely that is common sense.

Denny

Common sense and tax legislation are two entirely unrelated concepts.

Please don't tell me I don't get it when I have 11 years of experience, several professional qualifications and have read the legislation and guidance in this area whereas you are basing your logic on "common sense".

Since 1999 when the NMW legislation came in, if people had followed your advice, assuming the average NI cost has been £1,000 pa, it would have cost them £8,000 in additional NI. In this time, not a single one of my clients has had their NMW payment status challenged. I am quite sure that you would rather have £8K less in the bank and be able to "hold your head high" but I am equally sure that 99% of my clients would rather have an additional £8K in their bank accounts.

If you choose to pay more tax than the legislation/guidance requires you to based on your concept of "common sense" than that is absolutely fine by me. But until you have any kind of relevant experience or training in this area (please correct me if you do), it is unhelpful to spread this propoganda on a public forum, particularly with so much tax at stake and with such a wide audience.

Puma

[Lewis]

My belief is that it is a higher excess via the back door. If you have paid yourself £10K salary, the amount of the claim payable under the insurance is £1,000 less.

They refuse to insure you if you pay below £9,500. I will ask them why.

[Sockpuppet]

There is a lot of anger on these forums. Also imho the angrier people are the less they know.

[Sockpuppet]

Coincidentally, I was speaking to a very highly respected lecturer today who confirmed that she advises her clients to take £100 pw.

So shes a lecturer. Maybe if she was an accountant that would have worked out well.