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You will have noticed the salary amounts at the bottom of your bookkeeping spreadsheet. So, what are these? and how do they save you tax?
By registering your company with HMRC as an employer with you as an employee and submitting monthly payroll reports, this allows you to take a tax efficient salary from your company as part of your earnings.
The tax efficient salary to take is currently £663 per month (£7,956 pa) because under HMRC rules this is the maximum amount that can be paid to you before there is any personal income tax or NI to be paid. The better news is that despite there being no NI due, a salary at this level still counts towards your NI record to preserve your entitlement to a state pension and other state benefits.
By putting through a salary of £7,956 pa this reduces your corporation tax bill by a whopping £1,591!
TAX SAVING = £1,591