The Business Bulletin
What is the best way of taking money out of my business? With the start of a new tax year comes a change in the rates and thresholds for PAYE and NIC. This article will explain the optimal salary for a personal and family company and how to use dividends to ensure tax efficiency.
Personal and family companies – optimal salary for 2021/22
Preserving pension entitlement
needs 35 qualifying years. For the
One of the main advantages of paying a small salary is to ensure that the
earnings limit. A director has an
A popular profit extraction strategy for shareholders in personal and family companies is to pay a small salary and to extract further profits as dividends. The optimal salary will depend on
year remains a qualifying year for state pension and contributory benefit
year to be a qualifying year, earnings must be at least equal to the lower annual earnings limit, and for 2021/22, the annual lower earnings limit is set
purposes. To qualify for a full state pension on retirement, an individual
whether the employment allowance is available to shelter any employer’s National Insurance liability that may arise.
Issue 9 – Finance | 39
