Director's Fees or Salary?

[cuwdrapoes]

Am in the process of leaving Paystream (fees too high) and engaging an accountant to deal with my Ltd Co. Following up from first meeting with new accountant I am worried that he has set my intended salary too high at £11500 per annum (top line for company won't exceed £45k), in comparison to the way Paystream used the Director's Fees (£105 per week). What is the benefit of using a higher salary? In the old days I used the pay 50 pence below the NI level trick (£88.50 a week or something) to avoid the higher stamp rate, which if i pay myself 11500 I won't be able to do.

Cheers in advance!

[r0bly0ns]

What is the benefit of using a higher salary?

It's less likely that you will be audited.

It's a discussion that comes up quite a lot on here. Basically, if the IR come sniffing around and decide that you are using your profit (dividends) as salary (paying bills, mortgage etc... with it) then they can demand back tax on it all as though you took it as salary.

Some people take the risk, others don't.

[Ruprect]

It's less likely that you will be audited.

It's a discussion that comes up quite a lot on here. Basically, if the IR come sniffing around and decide that you are using your profit (dividends) as salary (paying bills, mortgage etc... with it) then they can demand back tax on it all as though you took it as salary.
Some people take the risk, others don't.

...following an investigation, and if you want an appeal PCG insurance will cover the legal representation for such an event, and they have a very high win rate.

[TheFaQQer]

There is a long-running debate about whether you should pay bare minimum (£5k a year or so) or whether you should pay yourself national minimum wage.

AFAIK, there is no evidence that paying NMW makes you any less likely to have an investigation or not.

It's up to you - I take my accountants advice, and pay myself NMW.

[Pickle2]

There is a long-running debate about whether you should pay bare minimum (£5k a year or so) or whether you should pay yourself national minimum wage.

AFAIK, there is no evidence that paying NMW makes you any less likely to have an investigation or not.

It's up to you - I take my accountants advice, and pay myself NMW.

Out of intrest, is there a
NMW for people who are salaried? i thought it just dictaed x pounds per hour?

This being the case do you pay yourself a different amount every week depending on how many hours you put in on behalf of your company?

[chris79]

I pay myself £120 a week directors fee. I don't believe personally that it will trigger an investigation, and even if it did I have nothing to hide.

Why let the fear of an investigation (based on baseless evidence by scaremongers on a forum) prompt you to act any different to how you as the Director feel fit to direct your own company within the parameters of the law.