Probably the most important post of the year for company directors!
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 2015-16
Salary – per annum: £8,060 (last year £7,956)
Salary – per month: £671 (last year £663)
Dividend – per annum: £30,891 (last year £30,518)
Dividend – per month: £2,574 (last year £2,543)
However, since the introduction of Employment Allowance some company directors will be better off paying themselves a £10,600 salary and slightly lower dividends (up to £28,606).
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 £203 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 recommendation shortly.
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