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Directors salary

Laura8192Laura8192 Feels At HomeRegistered Posts: 95
I had advised a new client to take a salary of £641 a month for this tax year (rather than the sporadic amounts between £500 and £1,500 he had been paying himself....), however I have since been advised that £785 a month is better to pay his "stamp" for NI contributions, has anyone heard of this and do you have clients that do this?

Comments

  • groundygroundy Trusted Regular Registered Posts: 495
    We use £650 a month which I believe to be the most tax efficient. If you pay a salary equal to personal allowances then you are paying more in NI that CT saved. At £650 the NI is minimal but sufficient for all state benefits.
  • Rozzi RainbowRozzi Rainbow Trusted Regular Registered Posts: 465
    We use £641 per month so no NI is payable. I understood this was still sufficient for all state benefits etc as it is above the LEL??

    I agree that for a Ltd Co and director it's not beneficial to use up the tax allowance, but one of our clients is a sole trader who employs her husband, and in her case I believe it is beneficial to use up his tax allowance as she will save tax and NI.
  • Laura8192Laura8192 Feels At Home Registered Posts: 95
    seems like different people use different rates, do they definitely still get all pension entitlements if they only receive a salary of £641 a month as this is my clients biggest concern?

    than you for all your comments, it is helpful to hear what different people do.
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