One of the most common questions we get asked is how should I pay myself efficiently? The answer is quite straightforward but we have created a Tax Calculator you can use to see the numbers behind the answer.
For 2019/20, pay yourself £8,632 in salary and the remainder of profit you want to extract, in dividends. This is called the Primary Threshold and above this your company pays 13.8% Employers NIC which makes it less efficient to pay salary than dividends. This assumes you have not received salary elsewhere in the year.
For 2019/20, pay yourself £12,500 in salary and the remainder of profit you want to extract, in dividends. This is your Personal Allowance and above this level you pay income tax on your earnings. As a company with more than one employee, you qualify for Employers Allowance for the first £4,000 of Employers NICs which is why the salary amount is higher in the single employee scenario. This assumes you have not received salary elsewhere in the year.