Small company owners may be in for a better than average pay rise this year!
The level of the director’s salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package would be:
Upper limits for 2014-15
Salary – per annum: £7,956 (last year £7,692)
Salary – per month: £663 (last year £641)
Dividend – per annum: £30,518 (last year £30,378)
Dividend – per month: £2,543 (last year £2,531)
However, with the introduction of Employment Allowance some company directors will be better off paying themselves a £10,000 salary and slightly lower dividends (up to £28,678).
Employment Allowance means that most employers will be able to reduce their Class 1 National Insurance contributions (Employers NI) by up to £2,000.
So, increasing your salary and yet not having to pay the Employers NI will save the company £163 per director / shareholder.
Not everyone will benefit. Generally if you have other income you’d be better sticking with the above “usual” remuneration package.
Each client of Massey Accounting Company will be receiving a personalised remuneration recommendation shortly.
Enjoy saving tax?
View our video: How to Save Tax ; and follow our blog on or click +Follow at the bottom of this page.