What is the optimal salary for a director who is an employee of a limited company?
It is important that the employee/director is paid over the National Insurance Lower Earnings Limit to qualify for state benefit. In 2019/20 this is £6,136.
The split between salary and dividend for 2019/20 is explored here:
If the employee/director has:
- Other sources of income (savings or rental income)
- Child benefit
- Pension contributions
we can perform a ‘what if’ analysis to determine the optimal tax efficient salary and dividend split.