Reply to: Salary 22/23

[l35kee]

I thought with a single director / employee, the ideal would be £11,908.

If you have 2 directors / employees, this then increases to £12,570 as the Employers relief offsets the additional NI.

Ahh, that'll be whty then thanks.

[Maslins]

I thought with a single director / employee, the ideal would be £11,908.

If you have 2 directors / employees, this then increases to £12,570 as the Employers relief offsets the additional NI.

Agreed. Employment allowance can be claimed by businesses with 2 people on the payroll, not those with just 1.

[Bodger]

I thought with a single director / employee, the ideal would be £11,908.

If you have 2 directors / employees, this then increases to £12,570 as the Employers relief offsets the additional NI.

[l35kee]

So just to throw another figure into the mix, my accountant is recommending £12,570.......

[eek]

The most time-efficient salary is to pay your company's entire income out as a single salary payment on April 6 of each year. Can't be doing with any of that other nonsense

Nope because there is a risk that you may end up with an inside IR35 contract.

The most time efficient and tax efficient approach would be to do the same on April 5th as the tax year ends.

[PerfectStorm]

The most time-efficient salary is to pay your company's entire income out as a single salary payment on April 6 of each year. Can't be doing with any of that other nonsense

[jamesbrown]

~£200 for making one payment to HMRC at year end (accountant / freeagent will sort the rest)
30 seconds effort? if that

Excellent, drinks are on pr1.

[pr1]

My point wasn't that you needed to pay this each month, it's when the liability arises and quarterly payments are fine (I don't recall mentioning a frequency). My point is that you save less than £200 quid and you then need to make ErNI payments. This trade-off is all pretty obvious, I guess. If you're really that bothered about optimising everything to within an inch of its life, knock yourself out.

~£200 for making one payment to HMRC at year end (accountant / freeagent will sort the rest)
30 seconds effort? if that

[Lance]

My point wasn't that you needed to pay this each month, it's when the liability arises and quarterly payments are fine (I don't recall mentioning a frequency). My point is that you save less than £200 quid and you then need to make ErNI payments. This trade-off is all pretty obvious, I guess. If you're really that bothered about optimising everything to within an inch of its life, knock yourself out.

was just providing the information my accountant sent me. Don't shoot the messenger.

[jamesbrown]

My point wasn't that you needed to pay this each month, it's when the liability arises and quarterly payments are fine (I don't recall mentioning a frequency). My point is that you save less than £200 quid and you then need to make ErNI payments. This trade-off is all pretty obvious, I guess. If you're really that bothered about optimising everything to within an inch of its life, knock yourself out.

[Lance]

Not really. Many will opt for £9,100 or less because it avoids the hassle of making ErNI payments on a regular basis, merely to save less than a couple of hundred quid.

Well, they’ll make one payment at the end of the year. Seems worth it.

My accountants have come back with this....

Your salary will therefore increase to £11,908 (£992.33 per month) for the 2021/22 tax year, effective from April 2022.
<SNIP>
The primary threshold for employees will increase to £11,908 and the secondary threshold for employers will be £9,100 for the new tax year. With the new £11,908 salary, it will mean the company will make a small payment of employer’s national insurance contributions in the final quarter of the 2022/23 tax year. However, this will usually be more tax efficient than taking the lower £9,100 salary, as the 19% Corporation Tax relief is greater than the 15.05% in national insurance contributions that will be paid.

suggesting that jamesbrown view of £9100 reducing the frequency of payments is not true.

[PerfectStorm]

Not really. Many will opt for £9,100 or less because it avoids the hassle of making ErNI payments on a regular basis, merely to save less than a couple of hundred quid.

Well, they’ll make one payment at the end of the year. Seems worth it.

[jamesbrown]

All good contractors will be using £11,908 for this year.

Not really. Many will opt for £9,100 or less because it avoids the hassle of making ErNI payments on a regular basis, merely to save less than a couple of hundred quid.

[JHamp82]

£11,908 annually works out better with remaining as dividends. There will be small employer NI to pay(assuming you don't qualify for employment allowance) at 15.05% but corporation tax relief on this would be 19%.

[PerfectStorm]

All good contractors will be using £11,908 for this year.