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 2012/13:

  • 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 £107 per week in 2012/13.
  • Employer's secondary class 1 contributions are paid when pay exceeds £144 per week in 2012/13.  
  • So the optimum amount to qualify for benefits that an employee or director needs to earn and avoid NICs is between £107 and £144 per week.

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.