What Is Your Remuneration Plan For 2017/18?
There's lots to think about ...
The Spring budget was last month, and now it's time to do the first pay run of the new tax year. So how much are you going to pay yourself from your business?
When it comes to your remuneration plan for 2017/18 there's lots to think about!
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Across the UK, both accountants and business people will be looking very carefully at this, but how does it affect you? There's so much to consider:
The personal allowance is set at £11,500pa, should you pay yourself that and have a top up dividend?
Or maybe you should pay yourself at the NIC threshold of £8,164pa instead?
What about the minimum wage of £7.50/hr?
Does your business qualify for the £3,000 employers allowance?
The point at which you go into 40% tax is £45,000 and at £50,000 you have to start repaying your child benefit. Between £100,000 and £123,000 you lose the personal allowance, which means an effective tax rate of 60%.
Then there are auto-enrolment pensions to think of. What about paying more in pension contributions than just the auto-enrolment minimums?
We haven't started bringing in benefits in kind and company cars yet!
It can get complicated, can't it? So what should you do? Well, it depends upon your personal circumstances as to what will be best for you.
As a general rule, the principle of a small salary and larger dividend will be the right answer. Equally, what if you are thinking more expansively than this and your remuneration will be over £150k?
What about a car then? If you have a company car, unless it is an 'ultra low emissions' vehicle (with emissions of 75g CO2 or below), then perhaps you should consider changing it. There are several excellent vehicles with a stated CO2 figure of less than 50g. If appropriate, you can maybe consider changing to a pickup truck which has a lower benefit in kind cost.
If you are thinking of changing vehicles, then it is always worth considering the tax cost and how it is likely to increase in the next few years. Otherwise, it is probably better to think about owning and running your car personally and charging your business for the mileage.
"Unsurprisingly, my advice is to consult your accountant for a personalised remuneration plan!"
If you don't have a personalised remuneration plan for you and your business, then do call me on 0333 335 0422 or click here to send over an email enquiry and let's see how we can help you.
Until next time ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.