I hope someone can help me, my little brain is hurting me thinking this one through!! Payroll is not my bag at all!!
I am newly a director of a company selling bathroom & kitchen sinks with my partner also as a director. As I work in this business more than he does we have agreed that I will take a small wage out (funds permitting) and then once my wage is covered any profit left over will be split between us as a dividend quarterly or something.
I've got a couple of questions, I think you can draw a certain amount of wage as a director and still be making NI contributions but not incur any tax (that might not be right). Basically I am looking at taking £200 per week out max as a wage so I am trying to find the most effective way to do it, for me not the tax man but I don't want to not be paying any NI!! Any help would be gratefully received.
If I have done the maths right, if you pay yourself £589/ month (£7072/ year) with the new rates, that should keep you out of tax and NI, and also keep your company below any employer contributions.
If you exceed this, your company pays employer Ni @ 13.8% , and if you exceed £602/ month you pay NI @12% . If you exceed £623/ months (£7475/ year) you start paying tax as well.
Don't forget, with dividends, the profit must be there before year end, to cover the dividend.
Bill
-- Edited by Wella on Wednesday 6th of April 2011 10:59:05 AM
Thank you so much Bill, I knew there was an amount I could be paid without getting involved in a load more paperwork & paying out but I couldn't work out what it was!!
Whoa, I think a misunderstanding here. The paperworks is still there. You just get less in salary.
You still have to fill out all of the forms at year end and monthly or quarterly send in zero amount payments (or fill out the online zero due declaration each quarter) where nothing is due.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Phew, you had me worried for a second there! I thought you were under the impression that if you didn't have to pay any money you didn't have to file the forms.
Good luck with the new venture,
All the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I know when I looked at it again I realised I had made myself look more thick about it than I am!! Thanks for the best wishes, I hope it works out so I can stay at home doing a bit of bookkeeping, bit of internet sales etc!!
