How much should I pay myself as a company director?

Tax Rates – 2013/14

The 2013/14 tax year starts 6th April, and there are changes to the tax and NI rate bands and limits. Directors may need to make some changes to their salary withdrawal in order to take advantage of the new rates and limits.

The basic personal allowance for PAYE has increased to £9,440, HOWEVER, the NI thresholds for 2013/14 are lower, and therefore optimum salary level would be to remain below the NI threshold.

National Insurance

The employee NI threshold increases from £7,590 to £7,740, but your company’s NI will start at £7,690. This, therefore, is the level you should aim to use in your calculations. Paying yourself £640 per month will mean no PAYE/NI payable by yourself, and no NI payable by the company. As long as you are paying yourself a salary, you will still receive a full year’s NI credit towards your State Pension (which will be increased to 35 years’ contributions from 2017 under the Government’s new Pensions Flat Rate Scheme).

 The Ltd company should be registered as an employer with HMRC.