Minimum Wage - New Guidelines

[Lewis]

Were their letters simply pointing out that NMW had changed (in case you employed a part time cleaner/secretary/whatever), or were they stating that as a contractor you had to pay the new increased NMW? Quite probably it was the former.

It was closer to the latter.

If you're a contractor bringing in £50-100k per year, and are paying a NMW salary of ~£10k, I don't really see that's any safer than just paying £5.7k. The difference is fairly pitiful, and HMRC will know full well that ~£10k is not a market salary for what you do. If you were to pay, say, £30k as a salary, then you might be on safer ground, as that quite possibly would be a suitable permie salary.

I agree absolutely. When I took out QDOS insurance years ago they had a minimum requirement of £9K. This has now been removed but I have not bothered to adjust my salary. Partly as personally I'm happy to pay a little bit of NI anyway; despite feeling the need for independent schools and private healthcare, I would still like to contribute something (that said my Corporation Tax bill is a big contribution!)

Also, on the basis you're outside IR35, you can legally pay yourself whatever you want as salary and dividend

Yes, exactly what I have always believed.

so I don't see why you should voluntarily do something which leads to you paying more tax just to keep HMRC on your side a bit more.

See answer above.

Lol...the NMW is just that, a minimum. I appreciate what you're saying, but I can't imagine it standing up too well in court if you said you were paying the little Phillipino boy "almost" the NMW!

:-) I would never in my wildest dreams think of saying I am 'almost' paying the NMW in defence of not paying it. I have always considered myself outside of it. It was more a way of indicating my salary without giving a specific figure.

[Sally BFCA]

How does claiming working tax credits affect a directr being paid NMW?

To claim the Tax Working Credits you have to be actually working a certain number of hours (not so for the Child Tax Credit element).

So if you are working you have to be, being paid at least the NMW hourly rate.

[blacjac]

To claim the Tax Working Credits you have to be actually working a certain number of hours (not so for the Child Tax Credit element).

So if you are working you have to be, being paid at least the NMW hourly rate.

Are you 100% sure on that?

what if you don't have enough turnover in the year to pay more than say 5k?

[d000hg]

Quay advised me to take a salary based on minimum wage - £11175 this year, paying £940 in income tax & £600.94 NIC leaving net income of £9634.06.

If I just want to keep my state pension and take the minimum in salary, then what changes? I figure no NIC is payable at all, and a chunk less income tax? Or does the PAYE balance out since you take more as dividends?

I'll maybe chase them about this on Monday - is this advise from HMRC available on t'web anywhere for me to link to?

[blacjac]

Quay advised me to take a salary based on minimum wage - £11175 this year, paying £940 in income tax & £600.94 NIC leaving net income of £9634.06.

If I just want to keep my state pension and take the minimum in salary, then what changes? I figure no NIC is payable at all, and a chunk less income tax? Or does the PAYE balance out since you take more as dividends?

I'll maybe chase them about this on Monday - is this advise from HMRC available on t'web anywhere for me to link to?

I have been advised by my accountant to do just that, 5,700 as salary = no NIC or PAYE.

However I am very interested in a reply from Sally as that is exactly what I have done.
I have spent this year mainly working on plan B and living off savings, which has meant only 5,700 income from my Ltd, which has not turned over enough to pay me any more, even though I have worked a 40 hour week.

The tax credit people didn't seem to mind this at all when working out what I was entitled to...... (and yes, I told them about my savings as well).

[TheFaQQer]

Are you 100% sure on that?

No - it's wrong.

There is an additional element available for those that work more than 30 hours per week, but according to the website, you would be eligible for something with

a) 2 kids
b) salary of £5700
c) working 20 hours a week
d) no other income

=> £3606

(Which is completely unrealistic, since you are unlikely to be surviving on that little income with two kids, but there you go).

[joey122]

As a single male earning 5700 a year they reckon I am entitled to £58 a week

Is anyone actually claiming tax credits whilst earning £500 a day??

Surely the HMRC must know about this??

No - it's wrong.

There is an additional element available for those that work more than 30 hours per week, but according to the website, you would be eligible for something with

a) 2 kids
b) salary of £5700
c) working 20 hours a week
d) no other income

=> £3606

(Which is completely unrealistic, since you are unlikely to be surviving on that little income with two kids, but there you go).

[trsisko]

Is it ok to pay my monthly salary set by my accountant at various times of the year for example if im short or havent earned any money from Jan-May I pay myself Jan-May minimum salary in September?

[Lumiere]

Any point paying yourself round numbers £6000 = £500 x 12 - not much extra tax/NI (circa £60 per year) and you still get state pension ?

[DiscoStu]

As a single male earning 5700 a year they reckon I am entitled to £58 a week

Is anyone actually claiming tax credits whilst earning £500 a day??

Surely the HMRC must know about this??

You have to declare dividends as income. You don't earn £5700 a year.

HTH