Salary for 2014/2015

[kevpuk]

Don't hold your breath...

Last Activity 7th March 2014 11:52

She's either got her trophy and dumped us or Craig has her chained to the kitchen sink...

She's hosting a Google+ Hangout on IR35 next week......hopefully not with Craig also in shot, if the chains thing turns out to not be fiction

[northernladuk]

Thanks all

Clare from Intouch what is your view please?

Don't hold your breath...

Last Activity 7th March 2014 11:52

She's either got her trophy and dumped us or Craig has her chained to the kitchen sink...

[kesm]

Thanks all

Clare from Intouch what is your view please?

[TheCyclingProgrammer]

If you've read the previous threads you'll see that for most people, £10k is the optimal amount, but not for everyone. As it can depend on so many factors the only person who can truly give you an accurate answer is your own accountant. They are right that it's up to you but they can still give an opinion. If they won't, get a better accountant!

[Martin at NixonWilliams]

Hello,

I did a search through the forums and I did find one post recommending a 10k salary and one recommending a 12k salary.
Can people tell me what they are picking?
And can an accountant like Clare or Martin recommend what salary I should be taking?

I asked my accountant and I received the usual we cannot recommend, it is your choice, which was not helpful because I am not sure what I should pick.

Thanks all.

It is odd for your accountant not to have a recommendation that suits your circumstances.

Assuming you are not caught by IR35, you are 100% shareholder, a director and you do not have a contract of employment, then you are pretty much free to choose a salary at whatever level you like as the NMW rules will not apply. It is entirely your choice, but the common options are:

£7,956 - This is the level of salary that can be paid before you incur any National Insurance. Note that there is a £2,000 employers NI incentive being introduced from 2014/15. If you qualify, a higher salary is likely to be more efficient.

£10,000 - This is the personal allowance for next year, i.e. the amount you can earn before paying tax, and is likely to be the most efficient option for those entitled to the £2,000 employers NI incentive. You will incur employees NI on the difference between £7,956 and £10,000 but this is outweighed by the corporation tax saving.

£12,000+ - A salary of £12,000+ is paid for different reasons. Some do it as they feel it protects them that bit more from an enquiry. For example if HMRC inspected all those paying a salary of £7,956, though there is no evidence to suggest this would happen. Others pay £12,000 purely to keep in line with NMW however given the amount of hours most contractors work £12,000 would probably not be enough anyway. NMW is currently £6.31 p/hour.

I hope this helps.

Martin

[cojak]

The choice, as they say, really is yours...

[ASB]

Of course by 10k remember to factor in your tax code. The general assumtion bring your tax free allowance is 10,000.

If it so happens your personal allowances are higher than 10,000 then there is no point increasing salary to take advantage since the ni suffered by ee and er combined is higher than the ct that will be saved by expensing that portion of the salary. But if you qualify for the employers relief on ni then it may be worth it. Suffer 12 ee ni, but save 20 ct.

In the case where your personal allowances are < 10,000 then similar applies. It all comes down to ni. In most cases a salary up to your personal allowance will be the most effective. But dont go above yor personal allowance if its above 153 per week since both tax and ni will be due and this exceeds the ct saving gained by expensing the salary.

even if tax challenged there are a host of paye calculatotrs which simply enable calcs based on your own actual circumstances. Compare the amount handed over, less ers ni if allowed the rebate, with 20% of it. When the total hand over is 20% you have reached the place to stop because the salary route has got more expensive than the ct saving it generates.

[kingcook]

Hello,

I did a search through the forums and I did find one post recommending a 10k salary and one recommending a 12k salary.
Can people tell me what they are picking?
And can an accountant like Clare or Martin recommend what salary I should be taking?

I asked my accountant and I received the usual we cannot recommend, it is your choice, which was not helpful because I am not sure what I should pick.

Thanks all.

If you want to pay more tax: £12K

If you want to pay less tax: £10K

[TykeMerc]

I suggest you get a better accountant, it's perfectly reasonable for them to give carefully thought out (and worded) advice on this sort of thing, £10k for 14/15 year seems to be a consensus view.

[kesm]

Hello,

I did a search through the forums and I did find one post recommending a 10k salary and one recommending a 12k salary.
Can people tell me what they are picking?
And can an accountant like Clare or Martin recommend what salary I should be taking?

I asked my accountant and I received the usual we cannot recommend, it is your choice, which was not helpful because I am not sure what I should pick.

Thanks all.