This is a frequently asked question and in the past you would normally take the maximum salary that avoids paying any taxes or national insurance.
But in 2014/2015 there is a new option for directors’ salaries due to the introduction of the new £2,000 employment allowances.
• If a company is able to pay the total £2,000 employment allowances in the year, then the best option would be to pay over the LEL but below the secondary level in 2014/2015 i.e. £7.956 PA (£663 per month)
• If a director does not have another source of income or the company hasn’t used the £2,000 employment allowance, it would be tax efficient to take out a salary of £10,000 PA. The £10,000 will be tax-free but you may be required to pay NIC. However, the NIC should amount to...
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