Recommended 2024/25 Salary

Salary Structure

Here's our recommended salary for 2024/25:

£12,570 (£1,047.50 per month) , this does mean making employer NIC contributions of £479 but avoids employee NICs.

The Benefits of this salary level:

• Maximises your dividend allowance

• Minimises your employer National Insurance Contributions

• You are still contributing to your Basic State Pension

• You save at least £750 Corporation Tax by taking a salary above the previous optimum amount of £9,100, £1,046 if at the higher rate of 26.5%

Taking Dividends After Salary

After receiving the recommended salary, you can take the rest of your income as dividends. However, dividends are taxed differently than salaries. Here's a breakdown of dividend tax implications:

• Up to £500: No tax paid (0%)

• £506 to £38,210: 8.75% tax

• Over £38,210: 33.75% tax

While we recommend this salary structure for many new and old businesses it may not be the best fit for everyone.

Some prefer not to have the extra admin burden of making employer NIC payments to HMRC but here at Gold Stag Accounts, we are on hand to remind you of any such payments.

Important Note:

These are not hard limits, but rather thresholds where your tax rate increases for each additional pound of dividends taken. The effective tax rate becomes less favourable on total earnings exceeding £100,000, at which point you could lose your personal allowance.

Additional Considerations

• Employment Allowance: Companies with more than two employees qualify for the employment allowance, effectively eliminating the first £5,000 of employer NICs.

• Student Loan/High Income Child Benefit Charge: If you have a student loan or claim child benefit and your income surpasses certain thresholds, you may have additional charges.

• To prevent any employer NIC payments to HMRC, the annual salary to take would be £9,100 (£758.33 per month).

Every business is unique, so consider consulting with your accountant to ensure you're maximising your tax efficiency. They can help you figure out the best way to structure your income based on your specific situation.