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 2013/14:
- 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 £109 per week.
- Employer's secondary class 1 contributions are paid when pay exceeds £148 per week.
- So the optimum amount to qualify for benefits that an employee or director needs to earn and avoid NICs is between £109 and £148 per week, or between £5,668 and £7,696 per year.
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?
Don't overlook the requirements of the National Minimum Wage. However, there are special rules for directors
