Share this content
13

Directors salaries 20/21

Ni limits and PAYE going forward

Didn't find your answer?

Will you be advising clients of the new salary limits for NI for 2020/21? i.e. 732 for those one man bands that do not receive employment allowance and 792 for others that do receive EA.

Replies (13)

Please login or register to join the discussion.

RLI
By lionofludesch
01st Apr 2020 15:27

I thought it was £720 and £ £1042, but I haven't opened any 2020/1 files yet.

It's not whether the company gets EA, it's whether it has any spare capacity within EA to cover the directors' secondary NIC.

Thanks (0)
By ireallyshouldknowthisbut
01st Apr 2020 15:47

@Paul, whilst its an "it depends", that was my initial conclusion on the likely optimum level. If your client doesn't mind making payments of PAYE the full PA might work for 2 director companies depending on other incomes but its not going to be much in it.

Thanks (0)
RLI
By lionofludesch
01st Apr 2020 16:04

You're right about the £732.

Thanks (0)
avatar
By insolventnl
01st Apr 2020 16:19

I think at present, if feasible under JRS (as even that is a grey area at the moment), most directors woud be thinking, should I increase my PAYE pay

Thanks (0)
Replying to insolventnl:
By Duggimon
02nd Apr 2020 09:28

As soon as they're in from the empty stable where they're bolting the door I expect them to be right on the phone.

Thanks (0)
Replying to insolventnl:
avatar
By lincolnartist
02nd Apr 2020 10:03

It's based on previous pay though

Thanks (0)
avatar
By thacca
03rd Apr 2020 16:41

I've just googled this and found lots of places saying £732 per month. But when I run the calculations I find its better to go to £792. The difference being £51.81 in take home pay.

The reasons it's better is because of similar logic as to why it is better to go to £1,042 when the employer's allowance is available.

Be grateful if someone could double check my calculations.

Thanks (0)
Replying to thacca:
RLI
By lionofludesch
03rd Apr 2020 16:48

£792 if you don't have to pay secondary Class 1 NI.

£1042 means paying 12% NI instead of 19% CT and 7½% dividend tax, again, assuming no secondary NI.

But every case is different.

Thanks (0)
Replying to lionofludesch:
avatar
By thacca
03rd Apr 2020 17:13

You said £732 above.

I am saying that I think £792 is better than £732.

I think we agree on £1,042.

Thanks (0)
Replying to thacca:
RLI
By lionofludesch
03rd Apr 2020 17:24

thacca wrote:

You said £732 above.

I am saying that I think £792 is better than £732.

I think we agree on £1,042.

£732 if you have to pay secondary NI.

I say again, every case is different.

Thanks (0)
Replying to lionofludesch:
avatar
By thacca
03rd Apr 2020 17:47

I have done the calculations and I think £792 is better than £732 for a single director who cannot claim employer's allowance. Of course my calculations may be wrong.

The reasons being you pay employers NI at 13.8% but get corporation tax relief at 19%.

I'm happy to upload my calculations for others to check. Does anyone know how I would do that on here?

Thanks (0)
Replying to thacca:
avatar
By IanRiley
20th Apr 2020 00:43

Most of these directors will be taking dividends. By increasing annual salary from £8784 to £9504 will mean in most cases that they'll pay an extra £720 at 7.5% (at least) on their dividends.

Thanks (0)
Replying to IanRiley:
My photo
By Matrix
20th Apr 2020 07:10

Not if they are taking extra salary instead of dividends. You have to compare the same net result. So the money extracted and the tax thereon.

Thacca may be right, the problem is that my sole Director clients are not used to paying NI every quarter so I may stick to £732. Especially with everything else going on.

Thanks (0)
Share this content

Related posts