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Chartered Certified Accountants
and Business Advisors

01530 267320

Directors Pay Structure 2017/2018 - What you need to know...

 

The tax free personal allowance for 2017/2018 is set at £11,500
 
The National Insurance earnings threshold is £8,164.  Earnings (salary) over this level will have National Insurance contributions due on them.
 
Both levels will attract Corporation tax relief at 19% however; if you are a one director only company, you will still be ineligible for the employment allowance as with the previous tax year. Therefore if you run with the £11,500 pay structure the company will be liable to pay some National Insurance.  Again, this will attract corporation tax relief at 19%.
 
We have detailed for you worked examples of both scenarios in their simplistic form to help you make your decision.
 
Based on a ‘profits’ figure of £45,000 see below for workings under both amounts:
 

  Option 1                    Tax Free Personal Allowance Option 2
Salary to the NIC Threshold
Profit £45,000 £45,000
Salary £11,500 £8,164
Employers NIC £460  
Gives Taxable Profits of £33,040 £36,836
Corporation Tax Due £6,278 £6,999
Profits Available for Dividends £26,762 £29,837
Dividends Within Personal Allowances   £3,336
Dividend Nil Band Rate £5,000 £5,000
Dividend Subject to Tax £21,762 £21,501
Personal Tax at 7.5% £1,632 £1,613
     
Net Cash Take Home £36,630 £36,388
Total Combined Taxes Due £8,370 £8,612



















If you have any queries please contact Jane in the payroll department on 01530 267320 or email jane@senceaccounting.co.uk.
 

21 Apr 2017

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