Director’s salary and dividends for 2024/25
Director’s salary and dividends for 2024/25
Auto Enrolment thresholds remain at £10,000
The auto enrolment pension thresholds for 2024-25 will remain at its current levels, with the initial earnings figure of £10,000 unchanged.
The lower earnings limit for qualifying earnings will remain at £6,240, and the upper earnings limit will remain at £50,270, in line with the higher rate tax band at this time.
Automatic enrolment means it is an obligation for employers to enrol all workers aged 22 to pension age into a qualifying workplace pension, provided that they usually work in the UK and satisfy the age and earnings criteria.
The minimum employer contribution is 3% of earnings, with staff paying 5%. Earnings include commission, bonus and overtime payments and employees are entitled to opt out of schemes.
If you need to set up a pension scheme for your staff or you are new to running payroll for your time, please get in touch with the Kennedys Accounting Payroll Bureau, who will be pleased to advise you and send you details to ensure you remain compliant.
Some FAQ’s to consider…..
Do I need to operate Pay as you earn (PAYE) to receive a director’s salary?
To pay directors’ salaries and employees’ wages, companies need to register as employers with HMRC and operate PAYE within their payroll.
Please talk to us here at Kennedys Accounting and we will be pleased to set up a scheme for you and advise accordingly with regards to making payments to HMRC, claiming your employment allowances and any other payroll queries you may have.
How and when do I pay tax on dividends?
Unlike salaries, dividends are not paid and taxed through PAYE. Instead, you will be responsible for declaring your dividend income to HMRC separately. To do so, you will need to register for Self-Assessment, file a Self-Assessment tax return after the end of the tax year, and pay any tax that you owe on these earnings directly to HMRC.
Here at Kennedys Accounting, we have packages available for company directors to look after your self-assessment as part of your accounting package and we will complete your self-assessments as part of this service and advise accordingly with regards to dividends, salary and taxation.