In this video I outline the changes to directors’ salaries for the next tax year 2021/22
Lower earnings limit
Resulting Tax: Tax Free
Advantages of this pay: You need to have at least this much pay for the year to count for your state pension
Secondary NI threshold
Resulting Tax: 13.8%
Advantages of this pay: This is the limit when Employers National insurance starts. Please see below regarding Employers Allowance
Resulting Tax: 20%
Advantages of this pay: This is the limit where Income tax starts. Please note:
1. If you have two or more employees you are likely to get the employers allowance of £4,000 so you might not pay employers NI.
2. If you have Interest or rent there is an additional £5,000 allowance for this income. A £12,570 salary allows you to take advantage of this.
3. £1,000 a month + or – is a useful sum into your personal bank account.
4. If you are unable to pay dividends at least having £1,000 a month might be useful