Optimal Salary Dividend Break

[DeludedAussie]

WHat is the optimal way to pay salary and dividend - I understand that the first 6,475 is tax free and this rises by 1K soon.

Why do I hear people saying they pay themselves 5715?

[Craig@Clarity]

£6,475 is the tax free amount but does create some NIC. £5,715 is both tax free and NIC free.

[SallyPlanIT]

£6,475 is the tax free amount but does create some NIC. £5,715 is both tax free and NIC free.

I would add to Craig's reply that if you take the lower salary and do not pay national insurance contributions (NICs) because they are not due; if you are in the UK state pension system, you WILL still receive the NICs credit for the year.