Reply to: 2014 Salary - £10K it is

[Clare@InTouch]

Hmm, I musn't have read Dave's letter properly before I put it in the bin...did it really say that?

He's not helpful......

I am writing to you today about the new tax cut for businesses and charities that starts on 6 April.
The new Employment Allowance could take £2,000 off your employer National Insurance
Contributions (NICs).

Britain has been through some very tough years. We endured one of the biggest bank bailouts in the
world and the deepest recession in generations. For businesses and charities like yours, on the frontline
of the economy, we know it has been especially difficult.

We came into Government with a long term economic plan to rescue the economy.

Thanks to your hard work, we are now seeing the results. A private-sector recovery with the economy
growing, jobs being created, and confidence reaching new highs. Businesses are saying to us they want
to invest, grow, and take on new people. The Employment Allowance is about helping you to do that.

The Allowance will cut up to £2,000 from your employer NICs bill. This means £2,000 cashback on
the cost of jobs that you can choose how to spend. I hope you will consider using it to take on
more employees.

Simplicity has been the priority in designing the allowance. It will be easy to claim, and all you have to
do is tick a box on your payroll software. You can check your eligibility and see more practical details
online at: https://www.gov.uk/employment-allowance

Around 1.25 million businesses employing someone will benefit from the Allowance, whether you are
taking on your first employee or your fiftieth. A third of all employers will see their NICs bill abolished.

The Employment Allowance starts on 6 April. I urge you to sign up so that you can benefit from a cut
in the cost of employing someone and help to grow our economy.

Yours sincerely

[Clare@InTouch]

I think I'll get back all the employers' NI that MyCo pays (yes, I do pay some, about £600 a year).

That was my understanding anyway

You'll simply not pay it over to HMRC in the first place.

[Platypus]

I think I'll get back all the employers' NI that MyCo pays (yes, I do pay some, about £600 a year).

That was my understanding anyway

[TheCyclingProgrammer]

My accountant has just had to send out a message saying that despite what it says in Dave's letter, there is NO £2k cashback, just the allowance...

Hmm, I musn't have read Dave's letter properly before I put it in the bin...did it really say that?

[Craig at Nixon Williams]

My accountant has just had to send out a message saying that despite what it says in Dave's letter, there is NO £2k cashback, just the allowance...

He could have just sent a flyer to every employer saying ‘Vote Conservative’ – it would got to the point much quicker and caused less confusion.

[cojak]

Dave's letter causing confusion

My accountant has just had to send out a message saying that despite what it says in Dave's letter, there is NO £2k cashback, just the allowance...

[DirtyDog]

My accounting software (Crunch) is forcing me to take £663 per month (£7956 annually) for the new financial year payroll however it seems to be the consensus that £10k is optimum.

If your accountant is dictating your salary level, then you may want to read up on the MSC legislation.

[Smartie]

I asked about it in January, with specific details (and a link to the topic on these forums) and was told that it wasn't decided yet. I've also asked more recently with no response. It's very possible that the software simply can't support a director's salary different to the 'recommended' amount but it would be nice to be told.

[Martin at NixonWilliams]

Your question hasn't really been answered, I would ask again and make it clear why you are asking.

Note that if you are not eligible for the £2,000 NI incentive then £7,956 is likely to be better for you but this is only really for those working in or for the public sector - see the following link for more details:

https://www.gov.uk/government/upload...A_Guidance.pdf

[Smartie]

Crunch says...

My accounting software (Crunch) is forcing me to take £663 per month (£7956 annually) for the new financial year payroll however it seems to be the consensus that £10k is optimum. I queried this as follows:

"Hi,
The system is asking me to set up a new payroll run for 2014 with a fixed salary amount of £663 per month. I queried in January and again more recently, whether this is the most efficient salary to take given new tax rules (on NI). My understanding is that the consensus is that a salary of £10k is the most efficient. Could you please let me know at your earliest convenience if this is indeed the case and if Crunch supports this?"

And the reply:

"Thank you for your email.
We advise taking up to the NI threshold which is £7956.00 per annum, or £663.00 per month for the new tax year.
The £10,000 you are referring to is the PAYE income tax threshold.

Warm regards

Emma Prendergast
Account Manager
Crunch"

Thoughts?

[Clare@InTouch]

Is it? I managed to submit RTI without specifying any hours worked.

The submission report says "HoursWorked D" which I assume means 'Director'.

If I had to say hours worked it would need to include time spent on Sales: job boards and speaking to agents/clients; Administration: bookkeeping, VAT returns & chasing invoices; R&D: dreaming up Plan B and posting on CUK.

It is - here you go: https://www.gov.uk/government/upload...-employers.pdf

Universal Credit payments are linked to how much money an employed Universal Credit
claimant has earned. This is captured through the new way of reporting PAYE information to
Her Majesty’s Revenue and Customs (HMRC) in real time. You may have seen this referred to
as Real Time Information or RTI.

[Contreras]

It's an RTI filing requirement for Universal Credits ...

Is it? I managed to submit RTI without specifying any hours worked.

The submission report says "HoursWorked D" which I assume means 'Director'.

If I had to say hours worked it would need to include time spent on Sales: job boards and speaking to agents/clients; Administration: bookkeeping, VAT returns & chasing invoices; R&D: dreaming up Plan B and posting on CUK.

[The Spartan]

Must be minted mate!

I've had more than 2 months this year but not out of choice!

It's all about planning buddy, I don't live to work the whole reason I became a contractor was the flexibility that and the fact I can't work under people

[psychocandy]

A very good point seeing as some contractors like myself, take two months off per year.

Must be minted mate!

I've had more than 2 months this year but not out of choice!

[Clare@InTouch]

One quick point - I hadn't considered this but your salary questionnaire asked me how many hours a week I work and this reminded me that £12k is only inline with NMW if you work a full working week. How much holiday does that assume?

For those who take long gaps or bench time between contracts, or regularly work contracts less than full time (I do about 4 days a week between two contracts), you can surely be inside NMW and still take a £10k salary?

Incidentally Clare, why are you asking me about my working hours?

It's an RTI filing requirement for Universal Credits - gives HMRC more information and, in theory, then enables them to act quicker in making changes to your record & not over/underpay claimants.

https://www.gov.uk/universal-credit/overview