Salary
If
you have other income from outside the company, your monthly standing order in
respect of your salary should be increased to £663 in line with the increase in
the Primary Threshold for 2014/15.
If
you have no other income, then the monthly salary amount should remain at £663,
but include a bonus of £2,044 in March 2015- meaning a total salary of £10,000
for the year; equivalent to the personal allowance.
At
£10,000 per annum, National Insurance for the company and you will be triggered.
But the company’s National Insurance bill will be offset by the Employment
Allowance. The Employment Allowance is a new relief available from 6th
April 2014 which can reduce an employer’s National Insurance bill by up to
£2,000 each tax year. So only your employee’s National Insurance of £245.28
will be due, (which should not be payable until 19th April 2015). This
salary offers the potential for an additional £1,799 in your back pocket.
In
either instance, the salary is a tax deductible expense for the company, should
not trigger any PAYE and preserves your entitlement to state benefits.
The
payments should occur on the last day of every month in order to correspond
with the payroll records we are maintaining for you.
Or
Please
ensure the date of the standing order corresponds with the date you are running
your own payroll.
Dividends
Any
surplus funds can be drawn as dividends, but these can only be paid from
profits after corporation tax, so you do need to have reasonable interim
management accounts/ bookkeeping to hand.
Assuming
you have no other taxable income other than the salary above, £28,678.50 can be
paid be paid to you during 2014/15; without incurring any additional tax
liability.
To
summarise your company remuneration package could look something like this:
Salary
|
£10,000.00
|
Dividends
|
£28,678.50
|
Employee’s
National Insurance
|
(£245.28)
|
Income
after tax
|
£38,433.22
|
This
remuneration package keeps you in the 20% band and ensures there is no further
tax to pay. Dividends above this level will attract an extra tax charge of 25%
of the net amount you receive, payable through your self assessment tax return.
Due
to Real Time Information, we would again recommend that you pay your dividends with
a separate standing order/ cheque etc. This should help to distinguish your
dividends from your salary in the event of an enquiry from HMRC and therefore
minimise the risk of say, underpayment or inaccuracy penalties.
Should you have any queries
regarding the above or any other matter, please do not hesitate to contact me.
Otherwise, I trust you will deal with my recommendations accordingly.
For further info regarding the
Employment Allowance, see link
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