Optimum salary for directors - 2015/16

The extension of Employment Allowance into 2015/16 means that directors of "one man companies" will, once again, be able to maximise the salary they take from their company.

Please bear in mind that it is impossible to give advice that "fits" everyone and you should consult your own professional advisor to check this works for you.

In general, if your company:

1. Qualifies for Employment Allowance;
2. Pays corporation tax; and
3. Has not utilised the allowance elsewhere, i.e. on other employees

you should pay yourself a salary of £10,600 per annum (£883.33 per month).

You will have to pay some National Insurance yourself (£304.80) but this will be outweighed by the extra corporation tax relief (£508.00) on the increased salary.

And finally, don't forget that if your National Insurance is calculated using the special rules for directors, you will not start paying any National Insurance until January 2016.