Directors payroll – Useful information

16th March 2018 Nicky Cole
Directors payroll – Useful information

For the tax year 2018/2019 there has been a small increase to the national insurance limits and personal allowance and a decrease to the Dividend Allowance, which reduces to £2,000.  The information below explains the changes and we will need to be advised of the salary that you would like to receive, from April 2018.


  1. From April 2018 you can pay a salary of £702/month (£8,424 per annum) without paying any tax or NI.

If you choose this option:

  • You will receive National Insurance Credits towards some benefits e.g. state pension
  • No income tax, or national insurance is due on a salary at this level
  • This is a perfectly legal and acceptable way of paying yourself from your company; in fact HMRC have been known to state that they do not have a problem with this approach
  • You can then take the rest of your personal allowance of £3,426 plus the dividend allowance of £2,000 without paying income tax (£11,850 personal allowance minus £8,424 = £3,426)
  1. The personal allowance has increased to £11,850.  To use this allowance, you can pay a salary of £987.50/month.

If you choose this option:

  • You do get National Insurance Credits
  • You will not pay income tax, however you will pay employee National Insurance of £411.12 for the year
  • There will also be employers national insurance of £479.64 for the year, due to HMRC not taking into account any Employment Allowance
  • You will still be able to take dividends of £2,000 with no dividend tax.
  • A salary is an allowable business expense which may reduce corporation tax.

There are two methods of paying National Insurance as a Director;

  1. The first is to pay it each month, based on the NI thresholds and pay rate known as the “table method”. This is what we recommend for Directors who take a regular
  2. The second method is to pay the NI only when the threshold of £8,424 has been reached, which usually occurs for the last 3-4 months of the tax year. This method is best for Directors that take an irregular

** We will always use the table method unless you tell us otherwise **

If you would like any further assistance, or advice on the best thing to do for you and your business, please don’t hesitate to contact us, we’re here to help!

*** Please ensure you advise us of the salary that you would like to take as a Director, starting from April 2018. ***

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