Remuneration planning

Pay yourself the best way possible

With a corporation tax return to complete, and hours of your time taken up by critical business tasks, it can be tricky to work out the best way to pay yourself as a company director. A salary from your company might sound like the obvious option, but this alone might not be the most tax-efficient way.

To avoid paying more than you need on your tax bill, we’d advise a dedicated structure that will work to your benefit and save you hours. We’ll talk to you to find the best and most financially secure route and draw up a plan that fits your model.

A common route for company directors is a low salary, topped up with dividend payments. If you keep your salary below the income tax personal allowance, you can use dividends to increase your earnings if the business turns a healthy profit.

You can take this lower if you wish – but be aware that you won’t get access to state benefits on a salary lower than the lower earnings limit for National Insurance. Keep in mind other sources of income (savings, rental income etc) also count to this limit, as the tax on wages will be deducted through PAYE.

Dividends are tax-free until the dividend allowance and are taxed accordingly after that.