How much salary should

I give myself in the tax year 2020-2021?

In the budget announced in March 2021, the threshold for personal allowance has been increased. There is an increase from £12, 500 to £12, 570 in the tax free personal allowance. The basic tax rate bracket has been increased to £37 700. This means that an individual will not pay any tax on its earning till £12, 570 and they will pay 20% on their income up to £37 700.

HOW WILL IT AFFECT YOU IF YOU HAVE INCORPORATED YOUR BUSINESS AND YOU ARE THE DIRECTOR OF THE COMPANY?

If you have your business incorporated this means that your business is a separate legal entity and all the profits and losses of the company do not belong to you. They belong to the company itself .

In this case there are 2 ways in which you can an individual can earn money from the company.

1. Work as an employee
2. Work as a director of the company

You can be an employee as well as the director of your company.

IF YOU ARE WORKING AS AN EMPLOYEE OF THE COMPANY

If you are working as an employee of the company, the company will give you salary.

As an individual you will be paying income tax and NI on this salary depending on the amount of salary that you are receiving from the company.

In the company accounts, this salary is treated as an expense to the company. It is deducted from the income of the company thereby reducing taxable profit which in turn reduces the corporation tax that the company pays.

IF YOU ARE THE DIRECTOR OF THE COMPANY

If you are working as a director of a company you will be entitled to dividends.

The dividends is the money given to the director of a company after it has paid its corporation tax and other tax liabilities such as VAT.

The most tax efficient way to extract money from your company is to pay yourself a combination of salary and dividends.

From the tax year starting April 2023,there is an expected increase in the corporation tax as well we will have to incorporate that change in analysing the salary and dividends being paid to the individuals.

Right now the question is does the increase in the threshold mean that you will be better off giving yourself more salary?

A low salary means that you do not have to pay income tax or NI on it. Since there is an increase in the income tax thresholds it is worth noting what the NI thresholds are .

In the year 2020-2021 the NI primary threshold is £9 568 and the secondary threshold is £8 840.

This means that when the salary of an individual reaches £9 568 the employees will start paying NI. If the salary of an individual is £8 840 the employer will start paying NI. To avoid paying NI all together it is suggested that the salary of an individual is set at £8 840 per year which comes out to be £736.66 each month for the tax year 2020- 2021. This amount of salary is covered by the personal allowance and is within the NI threshold.

You might need a PAYE accountant who can look after the payments to made to your employees. We at Taxaccolega , are affordable accountants in Croydon. If you run a company and you need advice in any matter we will be there to help you. Call us at 020 8127 0728 and we will be happy to help you.

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ID Verification Form For Companies House

From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House.

Companies House will issue a personal code to PSCs.
Taxaccolega (ACSP) can help collect data and assist.
Please answer the questions and upload documents.

Personal Details

Fornames * Last Name * Date of Birth * Nationality * Place of Birth *

Contact Details

Current Address * Date you moved in at current address? * Previous Address(es) in last 12 months (if Any) Email * Phone *

Role in the Company *

I am a Director I am a Person with Significant Control (PSC)

Identity Documents

ID Document * Address Document *
Are you an Overseas Director and PSC? *

Additional (Overseas)

Overseas Supporting Docs *

Privacy & Consent

You are declaring that all documents and information provided by you are true and correct, you are consenting to use and store your personal data and consenting for Taxaccolega Chartered Accountants to act as Authorised Corporate Service Provider (ACSP) on your behalf.

I confirm that I have read and agree to the above Terms & Conditions and consent to the processing of my data by Taxaccolega Chartered Accountants for the purposes of identity verification with Companies House.

Terms & Conditions – Identity Verification Process

By submitting, you authorise Taxaccolega to process your data for ID verification with Companies House.

I agree to Terms*

1. Purpose of this Agreement
1.1 These Terms & Conditions apply to the collection and processing of personal data and identity documents required under the Economic Crime and Corporate Transparency Act 2023 and Companies House identity verification rules effective from 18 November 2025.
1.2 By submitting your details through our online form, you authorise Taxaccolega Chartered Accountants (as an Authorised Corporate Service Provider – ACSP) to process your information for the sole purpose of fulfilling the identity verification obligations set by Companies House.

2. Client Responsibilities
2.1 You confirm that all information and documents you provide are true, accurate, complete, and current.
2.2 You accept full responsibility for any false, misleading, or incomplete information supplied, and acknowledge that this may lead to penalties or rejection of your verification by Companies House.
2.3 You must notify us promptly of any change in your details (such as name, address, or role in the company) which may affect the verification process.

3. Our Role & Limitation
3.1 We act solely as an intermediary in submitting your information to Companies House.
3.2 We do not guarantee the acceptance, speed, or outcome of any identity verification by Companies House. The final decision rests solely with Companies House.
3.3 We shall not be liable for any loss, delay, penalty, or consequence arising from:
* (a) inaccurate or incomplete information provided by you,
* (b) delays or failures within Companies House systems,
* (c) rejection or failure of verification by Companies House, or
* (d) events outside our reasonable control.
3.4 Nothing in these Terms excludes liability for death, personal injury, fraud, or any liability which cannot be excluded under law..

4. Data Protection
4.1 We will process your personal data in accordance with the UK GDPR and the Data Protection Act 2018.
4.2 Your data will be used solely for the purpose of identity verification and related compliance requirements.
4.3 We will retain your information only as long as required by law or regulatory obligations.
4.4 We will not disclose your information to third parties other than Companies House or other parties legally entitled to it.

5. Client Consent
By ticking the consent box and submitting your details, you confirm that:
• You have read, understood, and agreed to these Terms & Conditions.
• You consent to Taxaccolega Chartered Accountants acting as your Authorised Corporate Service Provider (ACSP) for identity verification purposes.
• You consent to the processing, storage, and transfer of your personal data and documents in accordance with Section 4 above..

6. Governing Law & Jurisdiction
These Terms & Conditions are governed by and construed in accordance with the laws of England and Wales, and any disputes shall be subject to the exclusive jurisdiction of the courts of England and Wales.

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How Much Salary Should You Pay Yourself in UK 2025?