Posted: 19, April 2022 by Amy Richardson
New Directors Salary
Following our previous blog about the updates to National Insurance the guidance on Director salaries are as follows:
The optimum director salary is £11,908.00 per annum, although if you are only a single directors payroll and do not have eligibility for employment allowance, then it maybe more suitable to process your wage on £9100.00 per annum, £758.00 per month. This is up to the secondary earnings limit for National Insurance.
Therefore, there is no tax or national insurance contributions due, so you will not have to worry about paying a monthly liability to HMRC.
Due to the NI increase, only being introduced from July 22, any directors that have other members of staff and are eligible for employment allowance, should be processed at £823.00 per month until June then £1048.00 per month going forward.
Marriage Allowance
You can transfer up to a maximum if £1260.00 of your unused tax allowance if you are married or in a civil partnership, meaning you could save £252 off on your income tax bill.
You can potentially back date this for up to 4 years, so before the end of this tax year you can backdate a claim for 2017/18.
To be eligible one partner must be a non-taxpayer and the other basic rate.
You are unable to claim Marriage allowance if you are living together but you are not married or in a civil partnership.
More guidance can be found at: Marriage Allowance: How it works - GOV.UK (www.gov.uk)
Tax Codes
When starting or changing a job, tax codes can be issued incorrectly meaning you will be paying more tax than is due.
Subcontractor CIS Rates
If you are a self employed subcontractor, you should be paying 20% tax on all earnings, if you are on 30% tax, you will need to call HMRC and register as a subcontractor, its simple to do and you can follow the steps below:
call them on 0300 200 3210
At the first round of options, you need option 1.
Then the second round of options, you want option 4.
You need to register as a subcontractor, you will need your UTR number and personal information when you call, HMRC will be able to instantly register you over the phone and you will be able to start having 20% deductions made.
Uniform Tax, Working From Home & Other Reliefs
You may be able to reclaim tax relief on expenses for work even if you are employed such as:
Work uniform that your company does not pay for
Working from home
Vehicles you use for work
Professional Fees and Subscriptions
Travel and overnight expenses
Buying other equipment
Personal ISA’s
Each year you can save up to £20,000 into an ISA and if you do not use it, you are unable to carry it onto the next tax year.
First time buyers can also save up to £4000.00 in a lifetime ISA (LISA) whereby you will get boosted £25% of all savings after 12 months.
No tax is paid on savings that is in ISA’s
Child Benefit
If you claim child benefit for any of your children you will need to watch your income.
Higher earners, those who earn over £60,000 PA will need to pay Child Benefit back in full, whilst anyone earning over £50,000 PA have to pay back a portion of the money in the form of income tax (they will change your tax code in this instance)
Any changes to your financial situation, such as a pay increase or new partner should always be monitored to avoid having to repay this.
Capital Gains Tax
Capital gains tax is charged on any profit you make when you sell something that has gone up in value, such as stocks and shares, artwork or a second home.
The first £12,300 of the profit is tax free however anything over that amount you will be charged up to 28% depending on what you have sold and also what rate taxpayer you are.
If you are planning on cashing in stocks and shares, it may be worth splitting this over 2 tax years to use the maximum tax free allowance.