Massey Accounting Company

making your business less taxing


Leave a comment

National Minimum Wage & Pensions rise from April 2019

From 1 April 2019 the minimum hourly pay rates along with the minimum contributions for auto-enrolment pensions will increase affecting both employees and employers.

First let’s look at the National Minimum Wages rates:

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) will rise from 1 April 2019.

The NLW increase of 38p represents a 4.8% rise, equivalent to an annual increase of about £700 for a full-time worker.

In summary and effective 1 April 2019 the follow minimum wage rates will apply

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice *
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70
April 2019 (new rates) £8.21 £7.70 £6.15 £4.35 £3.90

* The apprentice rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

The Government has previously said it plans to raise the national living wage to at least £9 per hour by 2020.

Ensure your payroll procedures are up to date. For further details and more rates visit gov.uk

 

Pension contribution rates increase from April 2019

If you employ staff and run a pension scheme the minimum contributions rates are increasing from April 2019. This has long been the intention of The Pension Regulator (TPR) and is the last increase of “phasing”. The increases are as follows:

  • Employer minimum pension contribution 3% (from 2%), staff contribution 5% (from 3%).

If we provide your payroll services then we will of course implement the increased rates on your behalf but because this represents an increased cost for both employer and employee we highly recommend that you let your staff know in advance of this change. To do so you may like to use this TPR letter template.

Source info and more detail: http://www.thepensionsregulator.gov.uk/en/employers/phasing-increase-of-automatic-enrolment-contribution

 

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.

Advertisements


1 Comment

Optimum Directors’ Salary and Dividends for 2019/20

What is the optimum directors’ salary and dividend mix for 2019/20?

Small companies will usually pay their directors with a mix of salary and dividends. The level of the directors’ salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for the forthcoming tax year is:

 

Upper limits (if intention is to fully utilise the basic rate tax band)


2019/20


2018/19

Directors’ salary – per annum

£8,632

£8,424

Dividends – per annum

£41,368

£37,926

It should be noted that dividends exceeding both the personal allowance and the dividend allowance of £2,000 will be taxed via the directors’ personal income tax return at 7.5%. Meaning that if dividends are paid all the way up to the basic rate band of £50,000 (2018/19 was £46,350) there will be a personal tax bill of £2,952 (last year £2,438)

Companies with more than just a single director on the payroll may benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £3,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £12,500 and dividends up to a maximum of £37,500 (the overall tax saving between the director and the company being around £270).

This second option will not be the best fit for everyone. More than ever, personal circumstances must be carefully considered to give the best results.

Each client of ours will be receiving a personalised recommendation shortly.

Enjoy saving tax?

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on 
or click +Follow at the bottom of this page.


Leave a comment

National Minimum Wage Rise from April 2018

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) are to rise from 1 April 2018.

The NLW increase of 33p represents a 4.4% rise, equivalent to an annual increase of about £600 for a full-time worker.

In summary and effective 1 April 2018 the follow minimum wage rates will apply

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice *
April 2017 £7.50 £7.05 £5.60 £4.05 £3.50
April 2018 (new rates) £7.83 £7.38 £5.90 £4.20 £3.70

* The apprentice rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

The Government has previously said it plans to raise the national living wage to £9 per hour by 2020.

Ensure your payroll procedures are up to date. For further details and more rates visit gov.uk

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.


Leave a comment

Optimum Directors’ Salary and Dividends for 2018/19

What is the optimum directors’ salary and dividend mix for 2018/19? Or click here if you’re looking for our more recent 2019/20 recommendation.

Small companies will usually pay their directors with a mix of salary and dividends. The level of the directors’ salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for the forthcoming tax year is:

 

Upper limits (if intention is to fully utilise the basic rate tax band)

2018/19

2017/18

Directors’ salary – per annum

£8,424

£8,164

Dividends – per annum

£37,926

£36,836

 

It should be noted that dividends exceeding both the personal allowance and the dividend allowance of £2,000 (previously £5,000) will be taxed via the directors’ personal income tax return at 7.5%. Meaning that if dividends are paid all the way up to the basic rate band of £46,350 (2017/18 was £45,000) there will be a personal tax bill of £2,438 (last year £2,138)

For those companies that have more than just a single director on their payroll then they will continue to benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £3,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £11,850 and dividends up to a maximum of £34,500 (the overall tax saving between the director and the company being around £240).

This second option will not be the best fit for everyone. More than ever, personal circumstances must be carefully considered to give the best results.

Each client of Massey Accounting Company will be receiving a personalised recommendation shortly.

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.


Leave a comment

Pension contribution rates increase from April 2018

If you employ staff and run a pension scheme the minimum contributions rates are increasing from April 2018 as set-out in the table below. This has long been the intention of The Pension Regulator (TPR) and is known as phasing.

 

 

Date Employer minimum contribution Staff contribution Total minimum contribution
Until 5 April 2018 1% 1% 2%
6 April 2018 to 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

If we provide your payroll services then we will of course implement the increased rates on your behalf but because this represents an increased cost for both employer and employee we highly recommend that you let your staff know in advance of this change. To do so you may like to use this TPR letter template.

Source info: http://www.thepensionsregulator.gov.uk/en/employers/phasing-increase-of-automatic-enrolment-contribution

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.


Leave a comment

National Minimum & Living Wage Rise from April 2017

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) are to rise starting 1 April 2017.

The eagle-eyed among you may notice that those on the National Minimum Wage (NMW) are enjoying their second increase in a year (the last being 1 October 2016).

In summary, and effective 1 April 2017 the follow minimum wage rates will apply

  • Workers aged 25 and over – £7.50 per hour (up from £7.20 from 1 Apr 2016)
  • Workers aged 21 – 24 years old £7.05 per hour (up from £6.95 from 1 Oct 2016)
  • Workers aged 18 – 20 years old £5.60 per hour (up from £5.55 from 1 Oct 2016)
  • Workers under 18 years old £4.05 per hour (up from £4.00 from 1 Oct 2016)
  • Apprentice rate £3.50 per hour (up from £3.40 from 1 Oct 2016)*

* The apprentice rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

Employers may be relieved to know that future rises are now planned for just once a year in April.

Ensure your payroll procedures are up to date. For further details and more rates visit gov.uk

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.


2 Comments

Optimal Directors’ Salary and Dividend Mix for 2017-18

Probably the most important post of the year for limited company directors!

Question: What’s the most tax efficient salary and dividend mix for the 2017/18 tax year?

An owner managed limited company will usually pay their directors / shareholders with a mix of salary and dividends.

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 for 2017/18 is:

Upper limits for 2017/18

Salary – per annum: £8,164 (last year £8,060)
Salary – per month: £680 (last year £671)

Dividend – per annum: £36,836 (last year £34,940)
Dividend – per month: £3,069 (last year £2,911)

It should be noted that since the introduction of the dividend ordinary tax rate of 7.5% on dividends over £5,000 there will be a personal tax bill of £2,138 (last year £2,025) if dividends are paid all the way up to the basic rate limit of £45,000 (last year £43,000).

For those companies that also have non-director employees on the payroll then they will continue to benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £3,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £11,500 and dividends up to a maximum of £33,500 (the overall tax saving between the director and the company being around £234).

This second option will not be the best fit for everyone. More that ever, personal circumstances must be carefully considered to give the best results.

Each client of Massey Accounting Company will be receiving a personalised recommendation shortly.


Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.