Getting your Money out
The biggest question asked.
There are four main ways to pay yourself
So How do you, as a Director, Get your Money out?
Pay yourself a basic Salary:
In 2022/23, you can pay yourself via PAYE - £758 per month - £9,096 for the year before paying National Insurance contributions.
You can pay yourself more, but you will attract Employer and Employee National Insurance contributions and Income tax.
NB, if you have two or more employees on the payroll, any Employer NI up to £4,000 will be credited to you by the HMRC as part of the Employment Allowance scheme so that you can pay yourself more.
The best way to get money out is through Dividends:
Some dividends are tax-free; you can take £2,000 in bonuses without any personal tax!
Above that, they are tax @ 8.75% up to the higher rate tax threshold, and then at 33.75%.
Remember you must be making a profit first in the company and pay Corporation Tax before taking any dividends!
It can also be advantageous to add a partner as a shareholder and use the £2,000 Dividend tax-free allowance.
Get what you are due in Expenses:
Any costs you incur personally in performing your duties as a director of the company can be reclaimed by you:
e.g. if you pay for parking in cash, you make an expense claim to the company, and it pays you back.
These expenses can then be taken out of the company with no tax implications or a need to make a profit.
The most popular expense is mileage, £0.45 per mile can be claimed - £150 annually for staff entertaining tax-free, usually your Xmas party!
Home office - if you do your paperwork at home, you can claim £6 per week tax-free. However, if you arrange for a lease agreement between the company and you, you can claim a portion of your home costs based on room size and usage.
We can sort the Lease out and save your £1,000's.
Finally, Pensions are a great way to invest in your future
Although you can't touch it until you're 55 years old, Pension payments are highly taxed efficient, saving you c26% in tax on the investment.
e.g. £10,000 Pension payment saves £1,900 in Corporation Tax and then it could make you a 7% return on it.
Brad, our Pension expert, can take you through it all.
* The information is indicative and intended as an example of taking monies out of your company. Every individual’s position is different, and you should consult an Accountant on how to maximise your returns based on your circumstances