With increase in allowances whats best base salary for next year?

[psychocandy]

OK, this year it was £7072 which meant you got credit for NI but didnt actually pay any and didnt pay any tax on this either?

What about next year? Have the NI thresholds changed at all?

Any accountants here want to recommend an optimum salary for next year?

[Notascooby]

SJD email recommends £11,273

[Hex]

OK, this year it was £7072 which meant you got credit for NI but didnt actually pay any and didnt pay any tax on this either?

What about next year? Have the NI thresholds changed at all?

Any accountants here want to recommend an optimum salary for next year?

NI tresholds are here: HM Revenue & Customs: National Insurance Contributions (found this with google )

My calcs make it 144*52 = £7,488/yr or £624/mth

[Hex]

NI tresholds are here: HM Revenue & Customs: National Insurance Contributions (found this with google )

My calcs make it 144*52 = £7,488/yr or £624/mth

Nixon Williams confirm this amount in this thread: http://forums.contractoruk.com/accou...rs-salary.html

[northernladuk]

Remember accountants recommend different levels. Some say pay some NI, others says it doesn't matter. The person who's advice counts is the one doing your books.

[psychocandy]

Yes, of course. Mine is off the opinion pay as little as possible - suits me.

Just wondered what optimum is. I guess they'll tell me in due course.

[ClearSky Rachael]

We've changed our thinking on this.

In previous years we have recommended that fee earners take a salary at no less than National Minimum Wage (NMW) as we believed this was one less factor for HMRC to take into account when deciding on whether or not to open a compliance review which could subsequently lead to an IR35 investigation.

Because of the latest news coming out of the OTS, we are no longer considering NMW to be an important factor for IR35. The amount that you pay yourself is completely your decision and can be influenced by a number of factors. For example, if you are planning on applying for a mortgage you might want to demonstrate a particular level of income. However, if we are approached for a recommendation based on tax planning and IR35 risk we would suggest that you take your salary at a level that results in no PAYE tax or National Insurance Contributions (NIC) being due.

For the 2012/13 tax year beginning on 6 April this would be £7,488 (although if you have a tax code of 810L or less you will still pay some tax). If you paid salary at or below NMW for 2011/12 we have set £7,488 as the default salary level for 2012/13 in your End of Year Declaration (unless you were already paying at a lower rate). If you would prefer to continue taking a salary at NMW or at another level then you can make an appropriate change in the End of Year Declaration.

The reasons we are doing this are twofold.

First of all, there is a financial advantage to you. The tax savings you make as a result of paying yourself less than NMW compared to our previous recommendation under the old regime is about £2,000 a year.

Secondly, there is a significant reduction in admin. As there is no tax and NI to pay then there is no need to make quarterly returns and payments to HMRC. All of this saves you time.

[Nixon Williams]

Our recommendation is £7,488 per annum or £624 per month.

At this level no NIC payments will be due but you will earn a credit towards the state pension etc.

Assuming you are on a normal tax code (810L for 2012/13) then there will be no tax deducted either.

If you pay at the National Minimum Wage, then this is set at £6.08 per hour (to increase to £6.19 from 01/10/12), so the annual salary would depend on the hours you do.

Alan

[Notascooby]

Does this value change if you take childcare vouchers from your company, not sure if this is deemed salary sacrifice and therefore best figure would be allowance + value of vouchers for the year?

[psychocandy]

Our recommendation is £7,488 per annum or £624 per month.

At this level no NIC payments will be due but you will earn a credit towards the state pension etc.

Assuming you are on a normal tax code (810L for 2012/13) then there will be no tax deducted either.

If you pay at the National Minimum Wage, then this is set at £6.08 per hour (to increase to £6.19 from 01/10/12), so the annual salary would depend on the hours you do.

Alan

Hi alan,

Yep. Thats what I want. Just wondered if the increased personal allowance made it worthwhile to pay a little NI now so as to use the whole allowance.

(Or do the dividends still use some of the personal allowance?)