For our PSC clients:
~ recommended main contractor salary £12,000 pa (£1,000 per month)
~ recommended spouse / company secretary salary where no other income £7,920 pa (£660 per month)
~ for a 100% shareholder on £12,000 salary, maximum basic rate dividend is £26,878 pa (2014/15 rates) (£26,878 x 10/9 +£12,000 = £41,864 which is Basic Rate Band plus Personal Allowances) – over that level Higher Rate Tax equates to 25% of the net amount drawn
~ from 2014/2015 the first £2,000 of Employers NI is rebated to most employers, the so called “Employment Allowance” – however as this covers Employers NI only, and not Employees NI there is no merit in increasing the recommended salaries to force use of this allowance.
For further commentary on these points, see How does it work in practice – salaries and dividends on our web site