Dissatisfaction with accountant's advice

[Clare@InTouch]

Oops. OK - as all the lovely, intelligent men (and women in case I've missed anyone) on this thread have already said.......

[Lambert Simnel]

Wow. Thanks all for so many replies in such a short period of time. Much appreciated

To answer a couple of points - I wouldn't mind if the accountant was arguing that this is the most appropriate salary from their professional standpoint. I do object if they are telling me it is on the basis that (a) £8200 isn't sufficient to gain a qualifying year for NI purposes, and then (b) a salary of £9620 is "more tax efficient" than £8200.

Unless I'm horribly mistaken, the accountant is wrong on both of those points, and it does make me worry how much reliance I can put on their other advice (e.g. what are reasonable business entertaining expenses, whether or not to claim lunches as subsistence, is my contract within IR35).

As to the explanation - well, I'll post what I received in an email this morning.

"On the recommended gross salary of £9,620.24 by xxxxxx for the next tax year you will be paying total NI/PAYE of £260.94 which will both give you total savings on your corporation tax at £1,976.23.

If you take a salary of £8,200 you will only make NI contributions of £54.24 and will make corporation tax savings of £1,650.84.

It will be more tax efficient if you take our recommended salary because you will make savings of 325.38 more than on your salary you requested to take."

What do you think?

[elster]

I'm not sure I agree with the accountant, I had a similar debate with mine ages ago and that led to me doing my own books. I have a pension and essentially all my tax free allowance is eaten up by it. I dont pay myself a salary - whats the point? it would get taxed straight away. I only pay dividends.
I think this is justifiable given my circumstances my accountant didnt. He is no longer my accountant.

[philip@wellwoodhoyle]

What do you think?

Time to get a new accountant - looks like they've forgotten employers NI in those figures - I've just run them through payroll software and whilst not exactly the same, they're very close to just tax and employees NIC only.

Until after 6.4.14, there is NO tax/nic benefit of paying over the thrshold at which NICs are payable.

I suspect that they have misunderstood last weeks' budget and think that the employers NIC holiday starts this April whereas in fact it starts next April 2014. If that's the case, it's very sloppy and, yes, you're right to worry about what else they're going to get wrong.

[psychocandy]

Wow. Thanks all for so many replies in such a short period of time. Much appreciated

To answer a couple of points - I wouldn't mind if the accountant was arguing that this is the most appropriate salary from their professional standpoint. I do object if they are telling me it is on the basis that (a) £8200 isn't sufficient to gain a qualifying year for NI purposes, and then (b) a salary of £9620 is "more tax efficient" than £8200.

Unless I'm horribly mistaken, the accountant is wrong on both of those points, and it does make me worry how much reliance I can put on their other advice (e.g. what are reasonable business entertaining expenses, whether or not to claim lunches as subsistence, is my contract within IR35).

As to the explanation - well, I'll post what I received in an email this morning.

"On the recommended gross salary of £9,620.24 by xxxxxx for the next tax year you will be paying total NI/PAYE of £260.94 which will both give you total savings on your corporation tax at £1,976.23.

If you take a salary of £8,200 you will only make NI contributions of £54.24 and will make corporation tax savings of £1,650.84.

It will be more tax efficient if you take our recommended salary because you will make savings of 325.38 more than on your salary you requested to take."

What do you think?

Doesnt sound right to me. I'd be worried....

[inniAccounts]

I won't comment on what you should do regarding your accountant, but I thought you might be interested in this - we've just updated our salary advice for the 2013/14 tax year:

What level of salary should I take from my Company?

Here's the poignant paragraph:

The most tax efficient salary for the 13/14 tax year, for most individuals, is between £5,668 and £9,440. In this range you’ll pay enough National Insurance to cover your state benefits (such as your state pension) however you’re below your personal allowance, therefore you will not pay any income tax on your salary. The majority of our clients choose to pay themselves a salary up to their personal allowance – £9,440 for most individuals.

James

[kingcook]

Difference of 1400 quid. Is it really worth the debate?

I believe it is worth the debate. We're talking a few hundred £££ of tax been paid unnecessarily. Of course, if you're the type that doesn't mind throwing a few hundred £££ downthe toilet then feel free to ignore this thread

[d000hg]

I believe it is worth the debate. We're talking a few hundred £££ of tax been paid unnecessarily. Of course, if you're the type that doesn't mind throwing a few hundred £££ downthe toilet then here is a toilet disguised as my wallet.

[Contreras]

I won't comment on what you should do regarding your accountant, but I thought you might be interested in this - we've just updated our salary advice for the 2013/14 tax year:

What level of salary should I take from my Company?

Here's the poignant paragraph:

The most tax efficient salary for the 13/14 tax year, for most individuals, is between £5,668 and £9,440. In this range you’ll pay enough National Insurance to cover your state benefits (such as your state pension) however you’re below your personal allowance, therefore you will not pay any income tax on your salary. The majority of our clients choose to pay themselves a salary up to their personal allowance – £9,440 for most individuals.

James

Could you give a specific example where paying salary above £7,748 is more efficient for the 2013-14 tax year?

[SueEllen]

teh txt spk is sick.