If you are a business owner or company director, you have the power to determine the salary you take each year. This can be a tricky decision, and there are many factors to consider, which is why Digital Tax Matters is on hand to guide you through the process.
Confirming The Optimum Salary For 2021-22
Through delving into the financial aspects of your organisation, our experienced team can work with you to confirm your optimum salary for 2021 to 2022.
In many cases, owners or directors of a company opt for paying themselves a smaller salary as this can prove advantageous in maintaining your national insurance record, allowing you to build up your state benefit entitlements. For example, during the 2021-22 tax year, should you allocate an annual salary of £6,420 to £9,568 to yourself, you will not need to pay NIC; however, you will gain NIC credit which can go towards your state pension.
Another important aspect to keep in mind is that if you employ at least one other person throughout the year, the company may qualify for the employment allowance of £4,000. This covers the cost of employer’s Class 1 NIC up to that cap.
How Our Reputable Team Can Help
Not only can our team help you to check whether your company is eligible to claim for employment allowance but also what your ideal salary will be for 2021-22. If you are a shareholder as well as a director, you can often extract further cash as dividends using the £2,000 dividend allowance and the lower dividend tax rates of 7.5% and 32.5%. This will help you to lower your tax bills, but we will always run through the options with you.
Every business owner or directors financial circumstances are different, so we highly recommend discussing your position with our team before deciding on a salary or dividends for the year. Please contact us to book a consultation.