Maximising Your 2018/19 Directors Income

As the end of the tax year approaches on 5th April 2018 its time to start thinking of the most tax efficient way to draw money from your limited company for the new financial year.

There are two options for drawing the most tax efficient salary from your company, and which route you can take depends on a few things.

Option 1 is only available to companies that can claim the employers allowance, this means companies that have more than one person earning over £5,824 on the payroll.

Both these situations are based on this being your only income, and that you have had no amendments to your personal allowance. They also rely on there being enough profit in the company for you to declare dividends.

While Option 2 shows more cash in your pocket, there are additional corporation tax savings from Option 1.  

Option 1 –

Gross Salary: £11,850

Dividends: £34,500

Total Gross Income: £46,350

Employees NI Payable: £411

Tax on Dividends: £2,438

Take home Cash: £43,501

Option 2 –

Gross Salary: £8,424

Dividends: £37,926

Total Gross Income: £46,350

Employees NI Payable: £0

Tax on Dividends: £2,438

Take home Cash: £43,912

We’d love to hear from you to help you decide which option will maximise the amount you can draw from your company.