THE 'BEST' SALARY TO PAY YOURSELF FROM YOUR BUSINESS (LIMITED COMPANY) 23/24 EDITION

[@Battersea_Bathrooms]

Thanks, I can't wait for another online drop-in session. It would also be great to learn about employing vs. hiring subcontractors.

[@HeelanAssociates]

Hey good to bump into you here 😃 The bookkeeping one is every month for free as a client. If you have any direct questions on employee vs subbie the team here can defo help with that one.

[@geoffcarlton4047]

I'm surprised you didn't mention Employment Allowance, get your partner on the books and save the whole NI bill. Probably a video in itself, good info as usual though 👍

[@HeelanAssociates]

Yup a very common strat in the right circumstances. Didn’t want the vid to go too long or too deep. This one needs an update kzbin.info/www/bejne/bKDNpHSNirSelas

[@foxabilo]

I thought you also needed at least 1 non director employee to qualify?

[@geoffcarlton4047]

@@foxabilo I hope not 🤔

[@geoffcarlton4047]

@@foxabilo I hope not 🤔

[@geoffcarlton4047]

@foxabilo nah, both the rules need to be apply to not be eligible... 1) only one employee paid above class 1 NI. 2) the employee is also a director of the company

[@lukegadd3209]

Hi, I'm currently going through the transition of sole trader to limited company. Should have done it so much sooner but so much involved it can be a little daunting to begin with. Your videos have been so helpful in getting my head around everything and can't believe how much I've learnt just from your videos l. So thank you. I have a quick question on transferring assets and can't seem to find the answer anywhere online. We supply and install kitchens and bathrooms as well as a great deal of other interior works and so looking to transfer over our equipment and tool (of which there's a great deal and some pretty new and expensive) I was looking at doing this transaction via a directors loan account. The Answer I can't seem to get anywhere is how to allow for depreciation of these tools? Is it as simple as researching the secondhand market value via ebay etc.? Or is there a rule of thumb or allowance involved? Hope you can help.. thanks in advance

[@HeelanAssociates]

Glad you found the videos useful! This one is difficult to answer here as there are a few ways of doing it, and there are tax consequences to what you might do. If you do what you are suggesting, usual practice would be estimate of market value using as you say, ebay or similar for comparable pricing.

[@CKINVESTOR]

If your company makes a lot of profit, would it be better to have a directors salary of 85k as you can reduce your corp tax bill, which would be taxed at 25%.

[@HeelanAssociates]

It depends on your income levels and other factors. You have to look individually because for example the £85k in a lot of scenarios may have employers NI on it that may make it inefficient vs other options.

[@avc-38371]

Thank you! What I never understand is that by setting a low salary and taking dividends that appears as low when you apply for credit, loans or tenancy contracts?

[@HeelanAssociates]

Your tax return proves the income. So when you go for a mortgage they ask for various docs proving your income as a whole.

[@maryss6130]

Most banks they dont use tax return. They usually ask for Sa302s with Tax Overview.

[@milesking6245]

Hi Dan - great video as ever. You dont mention Directors pensions as part of this, particularly as Company contributions to Directors pensions are expensed. Do you know what HMRC would deem an 'over-contirbution' if I take £12.57k as salary and total contribution is under £60k for tax relief? 1. Is it related to my PAYE salary level (i.e. £12.57) or 2. declared taxable profit (e.g. £20k to Pension by Co if >£20k profit taxable) or 3. just the £60k total contibution? Surely I cannot reduce my Co taxable profit to zero each year by boosting Director Pension Company Contributions by corresponding amount?

[@esemredemir]

You can google all of this to learn but let me tell you as a company director :) You can contribute max £12.57k You can reduce profit to zero, every year. Why not? Do you have to so profit, is there such a rule? Lets say your profit would be 120k if no salary and contribution. You could pay yourself 60k gross salary and 60k pension contributions. Both of them expense to company so no profit :)

[@milesking6245]

Thanks for your reply. My question is about the relativity of Company Pension contribution to PAYE salary...does this matter to HMRC? Second is the relativity of Company Pension contribution to Corp Taxable profit...does this matter to HMRC. As an example, if I generate £102.75k as a business and take £12.75k as PAYE salary, and £60k as Company Pension contribution, leaving £30k as Taxable Profit (from which I need to pay dividends to live on) - is that OK by HMRC?@@esemredemir

[@milesking6245]

Many thanks for your reply. My question is really about what HMRC permit as company contributions before 'over-contribution'. For example: If my company generates £102.57k, I take £12.57k as PAYE salary, and I need £30k of taxable profit (to pay dividends), can I expense £60k as a company contribution to a directors pension?@@esemredemir

[@HeelanAssociates]

Esemre You could but that’s unlikely to be the most tax efficient result taking into account National insurance.

[@HeelanAssociates]

Miles probably too much to cover here. I left that out the video because it’s a separate issue really. You can reduce your profits to zero. It’s more about whether the contribution is tax deductible and you can read hmrc detailed view here in their manual www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46035

[@LeaderofRussiadhbfsdfbs]

This is great, thanks. Do you have a link to a spreadsheet though that compares the different amounts payables at different incomes? I’d love to see that if you do

[@HeelanAssociates]

As accountants we obviously do these calcs, but sadly not something we have available to share.

[@dopareel]

Thanks, is it tax free to have been given/gifted money through one personal account to another?

[@HeelanAssociates]

Sort of. It’s a tricky question to answer as In some cases yes, in some cases no. In some cases yes but there is a form to make it no. Sorry it’s a bit vague but it’s difficult to simply state an answer to that!

[@patomlinson4865]

Hi. Wonderful insights. Question. please. I have taken early retirement I Very much interested in building my wealth.Can I take my lump sum state pension from HMRC to. Fund my LLC or S Corporation to purchase property. ?

[@CeriAnnwen]

Your pension will come monthly I'm pretty sure but you can fund your llc with that!

[@HeelanAssociates]

It’s usually possible that you could make a loan from yourself (say from your pension cash you’ve received) to your limited company, and the company purchase property.

[@aimableniyogakiza]

Does those salaries still apply on higher income earners?

[@HeelanAssociates]

It depends on what other ‘paye’ income you have. If you are already higher rate due to other income often you don’t process any salary, but it’s very dependent on circumstance and goals.

[@paulcyrel6678]

Hi I’ve set up ltd company in my name and painting myself monthly into my personnel account - will child Maintanence take from my ltd company ? I can’t get answers ?

[@HeelanAssociates]

Normally this would only happen if you were running a payroll for your salary and were instructed to deduct it from your wages.

[@jaynezhang]

Very helpful 👍👍

[@HeelanAssociates]

Glad you think so!

[@aimableniyogakiza]

Thanks 🎉

[@HeelanAssociates]

No prob :)

[@patelankita]

If director paid annually around £5000 as wages. Required to register for PAYE?

[@olliec1319]

Yes

[@HeelanAssociates]

It’s one of those were hmrc confuse the issue with guidance. In theory no depending on a few other circumstances: in practice absolutely. The problem is so many systems are connected now at hmrc and benefits, not having that data with hmrc can cause multiple problems.