Tax Free Money for Directors

As the director of your own limited company you are actually the employee too and it is worthwhile considering putting yourself on the payroll. All taxpayers have a tax free allowance of approximately £7,500 a year (for the year 2011-12)  and my reliable accountant sources assure me that if you were to take this in dividends, it would be taken after the Corporation Tax has been calculated.   

The figures work like this; to take a dividend of £7,500 your company would need to make around £9,400 in profits before tax. If you take the same £7,500 as a salary you would save over £1875 in tax this year. This is true for all directors of your company. Of course, it will depend on your profits for the year and your accountant is the best person to advise you on this and the need for you to be on PAYE.

There is another benefit to running a payroll for directors and that is the NI contributions. Even if your earnings are below the limits for deducting NI, you will still be credited for being ‘in the system’ however, I think most accountants would agree that it is worthwhile making some NI contributions.

Childcare Vouchers - Savings for Employer and Employee.

The rules surrounding Employer Supported Childcare schemes were changed in April 2005 and employers are now able to provide their employees with up to £55 per week in childcare vouchers.
For employees this can be hugely beneficial in helping with the costs of providing childcare whilst the parent(s) is at work. As most schemes are offered through the salary and payment for them is taken before tax, the savings for someone on basic rate tax can be up to £962.00 per annum.

However, it is worth noting here that this may affect the amount of tax credits you can get. HMRC have provided an online calculator so that you can see if - overall - you would be better off taking the childcare vouchers or not. Click Here For HMRC Calculator

For employers this is certainly worth considering as the employer NIC savings can be substantial. By offering Childcare Vouchers to all employees through a Salary Sacrifice Scheme employers can save up to 12.8% of the value of the Childcare Vouchers they provide their employees. For just one employee receiving the monthly maximum (£243) employers could potentially save £373 per annum alone. These savings will offset the charges made by the Voucher Provider.

New Employer Starter Pack.

As my service is generally aimed at employers and has much to do with their employees, I thought it would be a useful idea to include some information about actually employing staff and all that this entails. 

Now I am not an HR expert but I have met a wonderful lady who is. 

We met through 4Networking and have chatted on a number of occasions and I realise that she has much to offer employers whether they are seasoned pro's or just starting out. 

The company is called Challenge Manager and is fronted by Sam Swinstead and they have put together a fantastic package for all New Employers. Follow the link to find out more about this and if you would like to contact Sam to chat, she will be delighted to hear from you.

http://www.4networking.biz/Forum/ViewTopic/101363