Director’s Optimum Salary 2023-24

The Director’s Optimum Salary for 2023-24 is £12,570 per annum. The reason for this is all down to the National Insurance (NI) rates. The lower earnings limit for NI in 2023 is £6,396 per annum. If you earn over this amount it will count as a qualifying year for your future state pension. The primary earnings limit for NI in 2023 is £12,570 per annum. If your annual salary exceeds this amount, then you the Director will need to pay NI contributions. The secondary earnings limit for NI in 2023 is £9,100 per annum. If your annual salary exceeds this amount the employer (your business) will need to pay NI contributions.

So, if you are a director of a limited company and you want to pay yourself the optimum salary, you should pay yourself £12,570 per annum. This will ensure that you are making qualifying contributions to your state pension and that you are not paying any more NI than you need to.

At PGA, we understand that securing your money out of a Limited Company in the most financially advantageous way is a requirement for all Directors, Of course, the optimum salary for you may be different depending on your individual circumstances. If you have other income from outside your company, such as from investments or property, you may want to pay yourself a higher salary. You should also consider your tax position when deciding how much to pay yourself.

We run many Directors’ Payroll through our dedicated payroll company PGA Payroll, more information on our Directors Payroll Service and its cost can be found by clicking here

The Directors Optimum Salary is a business expense and can therefore be fully offset against the Limited Companies Corporation Tax, Assuming that the full £12,570 is paid this will result in a reduction in the annual Corporation Tax of £2,388

If you are unsure about how much you should pay yourself, you should speak to us and we will be able to help you to calculate the optimum salary for you based on your circumstances.