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Where Taxpayers and Advisers Meet

Minimum wage for a director

DanT
Posts:41
Joined:Wed Aug 06, 2008 3:53 pm

Postby DanT » Mon Sep 08, 2008 2:19 am

Hi,

Does the national minimum wage apply to a working director?

Thanks,

Dan

robbob
Posts:3060
Joined:Wed Aug 06, 2008 4:01 pm

Postby robbob » Mon Sep 08, 2008 3:17 am

Hi Dan

As far as i am aware.

If director has contract of employment and is paid salary similar to employee then minimum wage will apply.

If this is not the case then minimum wage will not apply.

If unsure contact the national minimum wage helpline. 0845 6000 678

pawncob
Posts:4599
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Postby pawncob » Mon Sep 08, 2008 3:17 am

With a pinch of salt take what I say, but don't exceed your RDA

DanT
Posts:41
Joined:Wed Aug 06, 2008 3:53 pm

Postby DanT » Mon Sep 08, 2008 4:19 am

Thanks,

So if there is no written contract it doesn't apply?

I am a director/shareholder working full time for the company I take £450 per month as a salary. I take the remainder as dividends. There is no written contract of employment.

Is this ok?

Thanks again,

Dan

trevormax
Posts:3
Joined:Thu Oct 30, 2008 12:46 pm

Postby trevormax » Mon Sep 08, 2008 9:56 am

this is fine as long as the company has enough profit to cover the amount of dividends that you and any other director are receiving. If you have a tax code of 6035, I woud suggest you have this as your annual salary as this is your tax free amount. Then have Dividends up to the basic rate limit. When working out how much dividends to have, you should also take into account any bank interest or property income etc you also receive to ensure you dont go into higher rate. If you do go into higher rate, you will have to pay the extra tax due on the dividends.

robbob
Posts:3060
Joined:Wed Aug 06, 2008 4:01 pm

Postby robbob » Tue Sep 09, 2008 12:15 am

Hi trevor

With a salary above 5435 EES NI 11% and ERS NI of 12.8% kicks in so there is no major advantage to taking the extra salary, this is especialy true is you have bank interest, company benefits or property income that can use this extra tax free amount.

Bob Jones
Posts:268
Joined:Wed Aug 06, 2008 3:43 pm

Postby Bob Jones » Wed Sep 10, 2008 2:47 pm

If you are paying dividends you have be sure that you are not caught by IR35 (otherwise you have to account for PAYE/NIC at the year end).
If you think you are not caught by IR35 you need to consider the latest High Court ruling in the Dragonfly Case .. http://www.shout99.com/contractors/show ... 53666;n=10

Regards

Bob
www.internet-taxation.co.uk


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