£500.77 per month

[kingcook]

My accountant last year recommended that i take out £500.77 per month as salary, and the rest as dividends. This also means (i think) that i still get build up a state pension, yet don't pay any NI (or income tax).

This year i plan on using one of those online web 2.0 accountants, but i have to set my salary.

Any ideas where the £500.77 amount is calulated from? $some_allowance / 12 = £500.77??

Should it be a different amount this year due to tax allowance increases?

[SimonMac]

Did you not ask the accountant to show his workings or do you just normally take his word on everything he say's?

[kingcook]

Did you not ask the accountant to show his workings or do you just normally take his word on everything he say's?

I asked the accountant "why £500.77?", and he said "to bring your salary up to the NIC earnings threshold".

£500.77 x 12 = £6,009.24

Last years NI threshold was £5,720.

Still not sure what to use this year!

[Clare@InTouch]

If you pay £589 per month, assuming you have a normal tax code, you'll get credit for state pension but not pay any tax or NI.

[kingcook]

If you pay £589 per month, assuming you have a normal tax code, you'll get credit for state pension but not pay any tax or NI.

Clare,

Can i ask how you came to work out the figure of £589?

For the sake of argument, what if i paid myself £1 less per month? i.e. £588?

[Epiphone]

Why not ask your new accountant? You're paying them after all...

[Clare@InTouch]

Clare,

Can i ask how you came to work out the figure of £589?

For the sake of argument, what if i paid myself £1 less per month? i.e. £588?

You can earn up to the secondary NI threshold and no NI will be due, and that's currently £136 a week, which equates to £7,072 = £589.33.

You could try running it through a payroll program, or the free HMRC software to see how it works.

HM Revenue & Customs: National Insurance Contributions

[DaveB]

You can earn up to the secondary NI threshold and no NI will be due, and that's currently £136 a week, which equates to £7,072 = £589.33.

You could try running it through a payroll program, or the free HMRC software to see how it works.

HM Revenue & Customs: National Insurance Contributions

I was playing with the at the weekend as it happens.

Put £589 monthly salary into the online NI calculator using my code letter (L) and it comes back as showing a refund being due.

Corporation Tax, yes.
Income Tax, yes.
VAT, yes.
National Insurance, Not a bob at the moment.

If I can't get my head round it soon I'm going to go look for a payroll co. to do it for me.

[Clare@InTouch]

I was playing with the at the weekend as it happens.

Put £589 monthly salary into the online NI calculator using my code letter (L) and it comes back as showing a refund being due.

Corporation Tax, yes.
Income Tax, yes.
VAT, yes.
National Insurance, Not a bob at the moment.

If I can't get my head round it soon I'm going to go look for a payroll co. to do it for me.

I see what happened - you're putting NI table letter L. This is probably incorrect as you should be on table A.

The letter on your tax code has nothing to do with NI - try it on table A and it works as expected!

[DaveB]

I see what happened - you're putting NI table letter L. This is probably incorrect as you should be on table A.

The letter on your tax code has nothing to do with NI - try it on table A and it works as expected!

Bingo! thanks very much Clare. Confusing Tax letter with NI letter.