How we support clients in the cost-of-living crisis
UK businesses are likely to face these three major threats in the coming months. Business owners believe these threats (high inflation, high energy bills, supply chain issues) will cause more business disruption than the Covid-19 pandemic.
We offer a range of services including Personal Tax Planning, Corporate Tax Planning, International Tax Planning, Tax Reliefs, VAT & Customs Duty, and Wealth planning & Private Client. As a limited company director, you have the power to determine the amount you pay yourself to minimise your tax bill while maximising tax relief. Most directors choose to pay themselves a combination of salary and dividends to achieve this goal. However, the most tax-efficient way to structure your director's remuneration will depend on your company's number of directors and employees and your individual circumstances.
To stay ahead of changes in tax thresholds and rates that will begin on April 6th, it is essential to act quickly. Our advice on how to pay yourself tax-efficiently in 2023/24 if you currently pay yourself a basic director's salary is as follows:
If you're a director paying yourself a basic director's salary, we highly recommend that you increase your monthly salary to £1,047.50 per month (£12,570 per annum) for the new 2023/24 tax year. This is especially crucial for companies with one employee or director, as tax and employee national insurance thresholds have been equalized for the full tax year at £12,570. However, if your company has more than one employee or director on the payroll, the Employment Allowance will reduce the employer's national insurance charge to nil.
Dividends for directors and shareholders will be tax-free up to £1,000 for 2023/24, and any dividends covered by the remaining unused personal allowance will also be tax-free. In the event that your total income exceeds £50,270, dividends will be taxable at 33.75% when they enter into the high-rate tax band. The £1,000 dividend allowance is not in addition to the basic rate band and needs to be taken into account when determining the rate of tax on your dividends.
In case the above scenarios do not suit your personal needs, we recommend that you seek advice. Our team is always available for more help and advice on the optimum salary and dividend payments for 2023/24.