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frauke · 04-07-2008, 01:16 PM

The trouble with "earning" more money as a salary

- is the more you earn, the more you pay in taxes, so the less you take home!

Ignoring tax credits -

A typical Company Director/shareholder will taking home during the year £36,000pa (£5400 salary £30,600 dividends)

A employee earning £36,000pa - take home would be £25,200! That £10,800pa less to live on - thats what goes to the Government.

For an employee to take home the same amount, thier employer will have to pay them a salary of at least £48,000 - an extra £12,000pa! But it will actually cost the employer £53,500 by the time you've added the extra Employers NIC contribution of £5,500!

Isn't it any wonder that the Government wants to stop directors/shareholders from doing this.

04-07-2008, 01:16 PM	#7 (permalink)
frauke Member Join Date: Aug 2007 Location: Hampshire Posts: 48	Re: 40% tax bracket is £36000? The trouble with "earning" more money as a salary - is the more you earn, the more you pay in taxes, so the less you take home! Ignoring tax credits - A typical Company Director/shareholder will taking home during the year £36,000pa (£5400 salary £30,600 dividends) A employee earning £36,000pa - take home would be £25,200! That £10,800pa less to live on - thats what goes to the Government. For an employee to take home the same amount, thier employer will have to pay them a salary of at least £48,000 - an extra £12,000pa! But it will actually cost the employer £53,500 by the time you've added the extra Employers NIC contribution of £5,500! Isn't it any wonder that the Government wants to stop directors/shareholders from doing this. __________________ Frauke Golding, AFA FIAB Incorporated Financial Accountant & Freelance Finance Director