Thanks for reading my post.
I'm a Director of a firm, but essentially working as a PAYE employee (my firm is a trading division of a UK limited company). For simplicity up to now I've essentially just been treated (for tax purposes) as a normal employee.
I get a basic monthly salary (which I pay PAYE income tax on, plus the company bears my employers NI contribution on this salary as a cost in the same manner as my salary).
However, if we make an annual profit (which I am thus entitled to 45% of) of say £100,000 - my share (£45,000) becomes £39,893 (before PAYE tax) as I'm made to bear the full employers NI contribution at 12.8%.
Do the other Directors (not PAYE) actually pay 12.8% on their share? If I was paid properly as a Director would this help? Do you think its fair that the company bears some of my employers NI but not all of it?
Is this complete madness? Fortunately for my firm I'm better at doing my job than understanding Accounting procedures!
In addition what are the major tax disadvantages for me as I'm simply just paying PAYE?
Thanks for your help in advance.
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