• Paul Clifton

What's the best salary to pay yourself?

Tax efficient salary for directors

If you are the director of your own private limited company, then paying yourself a salary of £680 pm or £8,164 pa in 2017-18 will ensure that you save the maximum Corporation Tax but pay no income tax or national insurance on the salary (assuming that you have no other taxable income).

However, the income tax personal allowance is set at a higher amount of £11,500 for 2017-18. This can leave unused personal allowances if the director has no other income to utilise the shortfall.

Director-shareholders should look at ways of generating taxable income e.g. from their personal company which will also save corporation tax. e.g. charging rent for use of home as office or charging for utility services paid personally but made available to the limited company. The latter will be a corporation tax deductible cost, but will not be taxed on the owner as it would be covered by the partially wasted income tax personal allowance

#payroll #limitedcompanies

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