What is the optimal monthly or weekly salary that can be paid by an employer without incurring a liability for the employer or employee for National Insurance (NICs)?
Look up National Insurance: rates for 2011/12; an employee can earn up to £135 per week or £585 per month.
- It is important that the employee or director is paid over the Lower Earnings Limit (LEL) for NICs in order to qualify for certain state benefits.
- The LEL is £102 per week in 2011/12 so the optimum amount to qualify for benefits that an employee or director needs to earn is between £102 and £135 per week.
Don't overlook the requirements of the National Minimum Wage. However, there are special rules for directors.
Tax planning for company owners
What is the optimal level of salary and dividend to pay and still remain a basic rate taxpayer?
For workings and a comparison of the current and previous years see Do I pay a salary or dividend?