Increasing director salary at year end to optimise salary

[tdixo]

Hi all,

I run a single director limited company. So its coming to my year end and my business has turned over more than expected. At the beginning of the year I was giving myself a very conservative salary of around £600 per month, basically just to put me over the NI threshold. I increased this a bit to £750 in the middle of the year. This has put me in a position where I've paid around £7000 in directors salary. With one month left in the year is its okay to just make the last month of salary pay to be like £3000 to push it closer to the £12000 optimum salary and reduce the profit left in the company subject to corporation tax?

Any help or advice would be greatly appreciate..

Many thanks

 

[Scalloway]

If you are the sole director of the company you have freedom to decide what to pay yourself as long as you pay the correct tax and NI. When I ran my own company my monthly pay was decided by looking at the bank account and seeing how much the company could afford.

 

[MyAccountantOnline]

....With one month left in the year is its okay to just make the last month of salary pay to be like £3000 to push it closer to the £12000 optimum salary and reduce the profit left in the company subject to corporation tax?

....

Yes

 

[MikeJ]

Yes

Hate these long winded answers...

 

[tdixo]

If you are the sole director of the company you have freedom to decide what to pay yourself as long as you pay the correct tax and NI. When I ran my own company my monthly pay was decided by looking at the bank account and seeing how much the company could afford.

Yes thats the case, okay thanks. I've just realised I need to send this money before the 31st. Do I need to run this additional pay through paye or send a bonus or can i just send the money and declare it in my accounts

 

[tdixo]

Yes

Short and sweet, love it, thanks

 

[Newchodge]

Yes thats the case, okay thanks. I've just realised I need to send this money before the 31st. Do I need to run this additional pay through paye or send a bonus or can i just send the money and declare it in my accounts

If you don't run it through payroll it will be a loan and not salary. I thought the whole point was to reduce the company profit. Yes it MUST go through payroll.

 

[tdixo]

If you don't run it through payroll it will be a loan and not salary. I thought the whole point was to reduce the company profit. Yes it MUST go through payroll.

ah okay. thank you very much for clarifying