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NIC Thresholds

Minimisation of NIC Liability

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I provide accounting services through a limited company of which I am a sole director.  Can anyone tell me what |I should be paying myself in salary for 2020/21 so as not to incur company or personal NIC but still to qualify for state benefits?  Thankyou.

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By SXGuy
17th Apr 2020 16:41

Max you can pay yourself without a nic charge but with a state pension credit for 20/21 is £9500

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By Matrix
17th Apr 2020 16:46

There would be employer NI though, so I vote £8,788.

https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2020-to-2021

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Replying to Matrix:
blue sheep
By NH
17th Apr 2020 16:52

Matrix wrote:

There would be employer NI though, so I vote £8,788.

https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2020-to-2021


Agree, while every situation is different generally by increasing the salary you will both pay employers NI and reduce the amount of dividends you can take tax free so the actual cost of extra salary is the ERNI plus 7.5% div tax against a saving of only 19% CT- you need to factor in EENI, ERNI, CT and div tax
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Replying to Matrix:
RLI
By lionofludesch
17th Apr 2020 17:59

Matrix wrote:

There would be employer NI though, so I vote £8,788.

Unless there's another employee, of course.

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By Matrix
17th Apr 2020 19:05

Well, looking at the other posts by the same poster it looks as if he has a PSC.

So I assumed there were no other employees. He also said sole Director so I think it was a reasonable assumption.

I have accountants working through their own PSCs as clients and it doesn’t mean they know anything about accounting or tax for their PSC.

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blue sheep
By NH
17th Apr 2020 19:12

Precisely what I thought, there are accountants and accountants....

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By SXGuy
18th Apr 2020 08:00

Thank you. You're right. You know call me stupid but I never even spotted that it was lower than 9.5k.

I think with everything going on recently I slipped a little.

Apreciate it.

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RLI
By lionofludesch
17th Apr 2020 17:01

I'll refrain from stating the obvious.

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