'Ideal' Employment Package?

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pabenny
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Re: 'Ideal' Employment Package?

Post by pabenny » Thu Nov 24, 2016 10:27 am

OK. Here's the most generic advice:

You/your friend can escape income tax and NI by paying a salary below the Lower Earnings Limit for NI. This is £112 a week. The downside is that you will then not be eligible for contribution-based benefits (Job seekers' allowance) if you have the misfortune to be unemployed. Probably more importantly, you don't earn any entitlement to state pension (you could still be eligible for a means-tested pension).

Payment of pension contributions potentially shelters income from tax and NI and so in theory, all of the remuneration could be paid into a pension fund. The major downside is that these funds are locked away until at least age 55.

I'm sure you were already aware of both of these points.

Beyond that, it's very dependent on the individual circumstances - other income, if any, other assets, expectations of inheritance.

Both hugginhill and I have repeated the point that it is all down to your/your friend's specific circumstances. If you really wanted some meaningful advice, you should have given a bit more information rather than insisting that it's possible to discuss in a vacuum.

It's not. For that reason, I'm out.

planteria
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Re: 'Ideal' Employment Package?

Post by planteria » Thu Nov 24, 2016 11:00 am

thanks, and no problem with you being out..

payments directly from Company to Pension certainly make a lot of sense. i have done some of that myself - although not as much as i would like to have done.
pabenny wrote:You/your friend can escape income tax and NI by paying a salary below the Lower Earnings Limit for NI. This is £112 a week. The downside is that you will then not be eligible for contribution-based benefits (Job seekers' allowance) if you have the misfortune to be unemployed. Probably more importantly, you don't earn any entitlement to state pension (you could still be eligible for a means-tested pension).
i got a response on MSE which includes..

"You would take salary to the primary threshold only with dividends on the amount above that. The primary threshold is £155 pw... If he goes above the primary threshold, then he would pay employers and employees NI. £155 qualifies him for state pension and other NI related benefits without having to pay any NI."

i have been employed by someone else's company for a the last 18months or so, but may look to become an employee of my own company again soon, so i would like to get this right. being tax efficient appeals, of course, but certainly want to qualify for full state pension.

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