How much salary shall I be taking?

[Clare@InTouch]

hello, what is the personal tax free allowance?

It's the amount you can earn before you pay tax. For most people it's standard £6,475, but it can be effected by benefits in kind, underpayments of tax from prior years etc

http://www.hmrc.gov.uk/rates/it.htm

However NI kicks in slightly sooner.

What wage you take is up to you, your accountant is simply offering you advice. Whether you listen to that advice or not is up to you.

.

[moorfield]

hello, what is the personal tax free allowance?

Ok, ok, which one of you is it? Own up....

[Olly]

hello, what is the personal tax free allowance?

Yours is 35K

[kellycell]

hello, what is the personal tax free allowance?

[Olly]

Thank you all, so would your recommendation be 7k or 12k?

Neither!
We/they/I said take up to your personal tax free allowance.
7K is just plucked from thin air as far as I can see.
12K is minimum wage but NOBODY has ever posted to say they've been picked up on it nor can your accountant give you an example (I expect) nor does it SEEM like it's the law either.

Probably what we should really be doing is paying a salary that's market rate, so what you'd get for performing that role as a permy, 35Kish.

Actually I recommend you pay yourself that

[moorfield]

thanks how much salary do people take?

5715 p/a

[kellycell]

thanks how much salary do people take?

[singhr]

I recommend you follow the advice your accountant gives you, it might hold up better in court.

[kellycell]

Thank you all, so would your recommendation be 7k or 12k?

[ASB]

But what's a contract? As we know from IR35, a contract isn't necessarily what's written on a piece of paper and can be implied from the circumstances.

The above could be taken to mean that a director isn't subject to NMW for the work they do as a director. But for the likes of us, who spend 99% of our time doing full time work for the company and only a tiny amount of time on our responsibilities as a director, you can't really say that we're not "workers".

I can't imagine it'd ever make a difference, unless perhaps you complained to HMRC about yourself.

That is the view put forward by some accountants. Another one is that there is an implied service contract. However the law does not differentiate between ones duties as a director and the work one may happen to do outside contract for the benefit of the company.

For your last point I don't think you can rely on that anymore. Previously HMRC did not have the power to instigate enquiry unless there was a complaint from a worker. This has now changed.

[VectraMan]

A director is only subject to the NMW if they are a "worker". This is only the case if they have a service contract.

But what's a contract? As we know from IR35, a contract isn't necessarily what's written on a piece of paper and can be implied from the circumstances.

The above could be taken to mean that a director isn't subject to NMW for the work they do as a director. But for the likes of us, who spend 99% of our time doing full time work for the company and only a tiny amount of time on our responsibilities as a director, you can't really say that we're not "workers".

I can't imagine it'd ever make a difference, unless perhaps you complained to HMRC about yourself.

[ASB]

Some say you must comply with minimum wage legislation which dictates ~£12,000 whilst others say you don't need too, as a director and can therefore pay the minimum amount to pay National Insurance (i.e ~£7000) and get the associated benefits should you ever need them.

Here is what HMRC have to say on the issue:

http://www.hmrc.gov.uk/nmw/#d



... so you choose

It's not a question of choice. It's a question of law.

http://webarchive.nationalarchives.g...page12589.html (can't be bothered to search for the current page).

A director is only subject to the NMW if they are a "worker". This is only the case if they have a service contract.

If the accountants advice is that the OP **MUST** then I would like them to state why (of course it is possible that the OP is not a director or does have a service contract - but would be unusual).

If their advice is keeping below the radar I would like to know why they think it will help. HMRC will only know the figures after selection for quick check - and 12k v x is not going to make a blind bit of difference.

In any event paying 12k just costs about 2.4k overall in extra unnecessary taxes.

Edit: http://forums.contractoruk.com/accou...ay-myself.html

[FarmerPalmer]

Some say you must comply with minimum wage legislation which dictates ~£12,000 whilst others say you don't need too, as a director and can therefore pay the minimum amount to pay National Insurance (i.e ~£7000) and get the associated benefits should you ever need them.

Here is what HMRC have to say on the issue:

http://www.hmrc.gov.uk/nmw/#d

by visiting a sample of employers about whom no complaints have been made, to check that all employers meet their obligations under the National Minimum Wage Act.

... so you choose

[ASB]

At the moment, I am taking £12,000 /year as per my accountancy firm's recommendation.

I had another accountant tell me that I should be taking £7,000 / year..
Which one is correct?

thank you

Whatever you want and feel like paying. From a tax and state pension point of view paying yourself an amount equivalent to your tax code is sensible (unless you already get if from other employment). Search, you should find what you are looking for and the justifications.

[kellycell]

At the moment, I am taking £12,000 /year as per my accountancy firm's recommendation.

I had another accountant tell me that I should be taking £7,000 / year..
Which one is correct?

thank you