THE 'BEST' SALARY TO PAY YOURSELF FROM YOUR BUSINESS (LIMITED COMPANY) 23/24 EDITION
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- เผยแพร่เมื่อ 18 พ.ย. 2023
- Dan covers the most tax efficient salary to pay yourself as a director of a limited. Paying yourself the ’right’ way as a small business owner is very important in order not to cost yourself money.
In this video, Dan get’s straight to the point of what levels of salary most people will pay.
Topics include:
The most tax efficient (optimal) director’s salary for 2023/2024
How to pay yourself from your limited company (UK)
Director’s salary
Employers Allowance
Employers National Insurance
Dividend tax rates
Income tax rates
Salary vs Dividend
Corporation tax
… and more!
If you have any questions or thoughts on this, please comment below.
Other useful videos:
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#accounting #smallbusinessuk #tax
Note: As always, these videos are educational and should not be considered financial advice.
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Thanks, I can't wait for another online drop-in session. It would also be great to learn about employing vs. hiring subcontractors.
Hey good to bump into you here 😃 The bookkeeping one is every month for free as a client. If you have any direct questions on employee vs subbie the team here can defo help with that one.
Thank you! What I never understand is that by setting a low salary and taking dividends that appears as low when you apply for credit, loans or tenancy contracts?
Your tax return proves the income. So when you go for a mortgage they ask for various docs proving your income as a whole.
Very helpful 👍👍
Glad you think so!
Thanks 🎉
No prob :)
I'm surprised you didn't mention Employment Allowance, get your partner on the books and save the whole NI bill. Probably a video in itself, good info as usual though 👍
Yup a very common strat in the right circumstances. Didn’t want the vid to go too long or too deep.
This one needs an update
th-cam.com/video/6ojsAWUOk_I/w-d-xo.html
I thought you also needed at least 1 non director employee to qualify?
@@foxabilo I hope not 🤔
@@foxabilo I hope not 🤔
@foxabilo nah, both the rules need to be apply to not be eligible...
1) only one employee paid above class 1 NI.
2) the employee is also a director of the company
Thanks, is it tax free to have been given/gifted money through one personal account to another?
Sort of. It’s a tricky question to answer as In some cases yes, in some cases no. In some cases yes but there is a form to make it no. Sorry it’s a bit vague but it’s difficult to simply state an answer to that!
Hi. Wonderful insights. Question. please. I have taken early retirement I Very much interested in building my wealth.Can I take my lump sum state pension from HMRC to. Fund my LLC or S Corporation to purchase property. ?
Your pension will come monthly I'm pretty sure but you can fund your llc with that!
It’s usually possible that you could make a loan from yourself (say from your pension cash you’ve received) to your limited company, and the company purchase property.
Hi Dan - great video as ever. You dont mention Directors pensions as part of this, particularly as Company contributions to Directors pensions are expensed. Do you know what HMRC would deem an 'over-contirbution' if I take £12.57k as salary and total contribution is under £60k for tax relief? 1. Is it related to my PAYE salary level (i.e. £12.57) or 2. declared taxable profit (e.g. £20k to Pension by Co if >£20k profit taxable) or 3. just the £60k total contibution? Surely I cannot reduce my Co taxable profit to zero each year by boosting Director Pension Company Contributions by corresponding amount?
You can google all of this to learn but let me tell you as a company director :)
You can contribute max £12.57k
You can reduce profit to zero, every year. Why not? Do you have to so profit, is there such a rule?
Lets say your profit would be 120k if no salary and contribution.
You could pay yourself 60k gross salary and 60k pension contributions. Both of them expense to company so no profit :)
Thanks for your reply. My question is about the relativity of Company Pension contribution to PAYE salary...does this matter to HMRC? Second is the relativity of Company Pension contribution to Corp Taxable profit...does this matter to HMRC. As an example, if I generate £102.75k as a business and take £12.75k as PAYE salary, and £60k as Company Pension contribution, leaving £30k as Taxable Profit (from which I need to pay dividends to live on) - is that OK by HMRC?@@esemredemir
Many thanks for your reply. My question is really about what HMRC permit as company contributions before 'over-contribution'. For example: If my company generates £102.57k, I take £12.57k as PAYE salary, and I need £30k of taxable profit (to pay dividends), can I expense £60k as a company contribution to a directors pension?@@esemredemir
Esemre You could but that’s unlikely to be the most tax efficient result taking into account National insurance.
Miles probably too much to cover here. I left that out the video because it’s a separate issue really. You can reduce your profits to zero.
It’s more about whether the contribution is tax deductible and you can read hmrc detailed view here in their manual www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46035
Does those salaries still apply on higher income earners?
It depends on what other ‘paye’ income you have. If you are already higher rate due to other income often you don’t process any salary, but it’s very dependent on circumstance and goals.
If director paid annually around £5000 as wages. Required to register for PAYE?
Yes
It’s one of those were hmrc confuse the issue with guidance. In theory no depending on a few other circumstances: in practice absolutely. The problem is so many systems are connected now at hmrc and benefits, not having that data with hmrc can cause multiple problems.