 |
Professional Indemnity Insurance
PI Insurance for contractors + public and employers' liability cover - find out more. |
What salary should I pay myself as a limited company contractor?
Posted Nov 25, 2011
One of the most commonly asked questions asked by limited company contractors is what salary should you pay yourself?
Derek Kelly, Managing Director of ClearSky Accounting, provides some pointers:
How to decide what level of salary to take
"Assuming that the individual is working outside of IR35, a low salary topped up with dividends is the most tax efficient way of drawing income out of the company.
"The tax free personal allowance for the current year stands at £7,475, so a salary of around this amount will utilise that allowance and qualify the year for state pension entitlement.
"To be precise, the most efficient level for the current year is £7,068 - no tax or national insurance is due but even though no NI is paid the year still qualifies for state pension entitlement come retirement.
"However, when deciding on the level of salary you wish to take, it is worth bearing in mind whether or not you need a salary for other purposes such as demonstrating you have enough income when applying for a loan or mortgage for example.
"Certain lenders will include the dividend income you take when establishing the amount you can borrow but this is not always the case."
Further Resources
Also worth a read is Limited company contractors - salary vs. dividends.
Contractor Services
- Professional Indemnity Insurance - Essential cover from Hiscox
- Helix Management Ltd - Up to 90% retention. Same day payments.
- Contract Experts - ClearSky Accounting on 08000 325 326
- InTouch Contractor Accounting - personal service & clear advice
- Parasol - the UK's favourite umbrella company
- Umbrella Company - 12,000 contractors can't be wrong!
- Together we're stronger! - Join PCG, representing contractors
- Cloud 9 Group - Umbrella Solutions only £27.50 per week
- Qdos - IR35 experts - Providers of low cost contractor insurance
- K & B Accountancy Group - Fixed fee contractor accounting only £75pm
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
Related Articles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
