Please can you tell me how much an employee (and also director) can earn per week without paying national insurance?
I know that it's £192.00 per week before paying tax but the rate tables aren't clear on national insurance....unless it's £153.00 per week before paying NI.
Basically I am after a weekly wage for a director who is an employee, an amount that's the most beneficial to the employee.
It may be worth considering paying the directors £10k over the year....
If you set the director up on directors cumulative, you can avoid NIC during the year.
Because you now save on employers NIC, due to the employment allowance, you would only pay employee NIC on anything above £7956 - this is at 12%
Sounds pants! But remember - your gross wages are tax deductible and save you 20% tax.
So, paying a higher wage - one which uses the full personal allowance of £10k, actually saves you 8% overall - £163.52
Here's the math:
The increased wage of £2044 will mean the CT bill is £408.80 lower, but you will pay £245.28 employee NIC in the year
The net effect is £163.52 in your pocket, overall.
That's my understanding, happy to hear other thoughts.
Your question refers to Class 2 NIC but Michelles answers in respect to class 1 NIC for employees/directors.
Michelles answer is correct in respect to class 1 NIC.
Class 2 NIC is paid by self employed and is currently £2.75 per week. You can be exempt from it if your taxable profits are less than £5,885. You need to claim the exemption. See the following link
