In light of the Rishi’s Spring Statement and the announced increase to the National Insurance thresholds, it means that our suggested Directors pay options have changed. Well it is actually only the option 3 approach that has changed:
Our approach with option 3 will be to take the total figure across the year and divide by 12 months, to have 12 equal monthly amounts.
Please Note: The employment allowance has increased to £5k for 22/23 tax year. It is also worth noting that the Employment Allowance isn’t available to companies where the only person on the payroll is a director, i.e. ‘Sole director employee’ limited companies.
Option 1:
Gross of £12,570 (PA Rate) = £1,047.50 per month / £241.00 per week.
No Tax
Employee annual NI = £357.00 (rounded) payable (will kick in towards end of tax year)
Employer annual NI = £523.00 (rounded – not payable with £5k Employers Allowance)
Option 2:
Gross of £9,100 (Secondary NI Threshold) = £758.00 per month / £175.00 per week. (Probably the better option for sole directors that cannot claim the Employment Allowance)
No Tax
No employee’s NI
No employer’s NI
Still above the Lower Earnings Limit, so will still earn NI credits towards state pension.
Option 3:
Gross of £11,908 (Primary NI Threshold – This is based on 3 months at the current threshold and 9 months on the new higher threshold from July) = £992.33 per month / £229.00 per week.
No Tax
No employee’s NI
Employer annual NI = £422.00 (rounded – not payable with £5k Employers Allowance)
Unless we are informed otherwise by you, those that were option 2 for 21/22 (£736.00 per month) will increase to £758.00 and those that were on the option 3 for 21/22 (£797.00 per month) will increase to the £992.33.
