As the National Minimum Wage does not apply to directors, there is more flexibility to pay a tax efficient salary.
Changes to the income tax and national insurance rates from April 2013 mean you can increase your current monthly salary from £624.00 to £641.00 per month, or weekly wage from £144.00 to £148.00 per week, without any deductions of tax or national insurance (based on the new standard 944L tax code) and still earn pension credits that will count towards the 30 years qualification needed for your state pension.
There are some instances when the above rates are not the most tax efficient, and a lower salary is more appropriate. If your current monthly salary is £464.00 this should be increased to £473.00 per month or your current weekly wage is £107.00 this should be increased to £109.00 per week. This means that you will continue to earn pension credits that count towards the 30 years qualification needed for your state pension.
Under the Real Time Information (RTI) regulations coming from April 2013, your pay period needs to reflect your actual pay day. For example, if you pay yourselves monthly then HMRC need a monthly submission on or before your pay day.
If you have any queries please give our Employers Services team a call on 01228 711888, and they will be happy to help.