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Updates to the 2019/20 NIC Limits Brings Changes to Directors Fees

The 2019/20 tax year commences on 6th April 2019, we will be highlighting over the next few weeks a few of the changes that are coming and how it will affect your business. Today we highlight Directors Fees.

What are Directors Fees?

Directors’ fees are payments from your company to you for your services as a director. They are liable to PAYE and NIC deductions, but in terms of your company expenditure, they need to be accounted for separately. It is your choice whether or not to take a director’s fee, as it is equally possible to provide your services free of charge. If you are the sole director this is your decision. If there is more than one director, the decision should be a joint one.

What directors fee are we proposing for 2019/20?
If you had a directors fee of £702 per month this year (2018/19) then for the forthcoming tax year, (2019/20) we will be recommending you have a director’s fee of £719.30 per month.

We are setting the director’s fee at the primary and secondary National Insurance threshold – this means that amounts paid at £719.30 a month will not attract Employees / Employers National Insurance-similarly they will not be subject to income tax in 2019/20, as the personal allowance is £12,500 (which equates to £1041.60 a month).

The principle benefits to setting the director’s fee at this level are:

  • You will receive National Insurance ‘credits’ and will be entitled to some basic National Insurance benefits – but won’t actually pay a National Insurance.
  • There will be Corporation tax relief on the gross salary in the company statutory accounts- currently at 19%.

 

Boomerang Back Office are experts in Recruitment Accountancy – We’re not just there for your year-end accounts. Our experts use smart technology to help you stay on top of your finances all year round, making it easy to benchmark progress, identify trends and forecast for the future – Find out more

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