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  • Tax

    Need assistance with PAYE calculation

    Option 1 is the most tax efficient as your wife will only pay 20% tax but you are limited to £8k

    Option 3 is better - £8k each, £1600 plus £3200 tax and no NI contribution - net income £11200

    Option 2 is less tax at £3200 but NI contributions would be a further £2064 - net income £10736

    Do you only have 1 company? If you have more then the NI allowance is available for each separate employer.

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    I think I have cracked it using this Calcuator

    Looks as though its better to pay my wife 16k a year and pay the NI and basic rate tax costs  rather than me take a salary of 8k and pay 40% tax

    https://www.contractorcalculator.co.uk/p...lator.aspx


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    Learn Change and Adapt ?????


    Are you including the Employer NI at 13.8% in your calculation?

    Above £8.4k your wife will pay 20% tax plus 12% NI but your company will also pay 13.8% NI, a total cost of 45.8%.

    Below £8,4k you will only pay tax at 40%

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    yes its a  very close call to be honest

    which ever way you cut it its still in the region of 40% tax You cant win really


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    Learn Change and Adapt ?????


    I don't think it covers directors I believe its only employees

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    Learn Change and Adapt ?????

    Every director is an employee. It used to be used by single director/employee companies like mine, but Hammond changed the law to stop that. He wouldn't have needed to if it didn't apply to directors being paid a salary.

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