How to pay yourself tax efficiently: The optimum salary for 2018/19

The most common question we get asked is, how can I withdraw funds from my company as tax efficiently as possible?  The answer isn’t a simply one, and depends on a few factors, but generally, as long as your company is making the post tax profit to support it, the best combination is a low salary, and dividends.

So, how much salary should I take in 2018/19? Again, that depends on a few things, but lets assume for a minute that you are the only employee of the business. In this case, we would be recommending a salary fo £8,424 per annum, which is equal to the national insurance threshold.

The reason we recommend the above, is that any salary declared over and above this, will attract both 12% employee’s national insurance, and 13.8% employer’s national insurance, but whilst the salary does go down as a cost for the business, and therefore save the company corporation tax, the rate for this is on 19% and therefore you would be out of pocket by 6.8%.

However, if you have another employee on your payroll, who earns at least £702 per month, this then makes the company eligible for the employment allowance, which, if isn’t fully utilised by the other employee, could mean you could afford to increase your salary to the tax threshold of £11,850, as the excess over the NI threshold would only be subject to the 12% employee’s national insurance.

In summary, there are lots of variables that could influence the optimum salary for you, so to be sure you are declaring the correct amount, be sure to get in touch with our team and we would be happy to run through your circumstances with you.  Drop us an email at This email address is being protected from spambots. You need JavaScript enabled to view it..

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