Category Archives: Money

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Salaries and Dividends: How to Pay Yourself as a Business Owner

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Owning a business isn’t easy: you’re in charge of finding customers, building your brand, looking after your employees, managing funds… and that’s before you consider the fact that you have to sort out your own income too!

It’s fairly straightforward for sole traders and partnerships who can simply withdraw cash from their business.

However, things are a bit more complicated if you’re the director of a limited company as you’re technically an employee of the firm. This means that you can pay yourself a salary as well as dividends – but they’re not one in the same, as they’re subject to different types and rates of tax.

In short, the best way to pay yourself is by taking a modest director’s salary and supplementing your earnings with regular dividend payments. But what’s the most tax-efficient way to go about this so that you can maximise your earnings? Keep reading and we’ll talk you through it.Continue reading →

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How can the Marriage Allowance save you money?

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There are many financial and legal benefits to being married or in a civil partnership, but one of the most overlooked reasons is the potential for tax relief.

This is because, thanks to the Marriage Allowance, where one partner earns below the tax threshold, they can transfer a portion of their personal allowance to the other partner, reducing the amount of tax they need to pay.

Am I eligible?

The Marriage Allowance relies on one spouse earning below their Personal Allowance of £12,570 per year. This can be through not working, having a low-paying or part-time job, or being retired.

The other partner must be paying the basic tax rate to receive the allowance, meaning their annual income must be between £12,571 and £50,270 per annum.

If this is the case, the lower-earning partner can transfer up to £1,260 of their personal allowance to their higher-earning partner.

How does it work?

By transferring part of your personal allowance to your partner, you increase their personal allowance up to £13,830. This reduces the portion of their income that they are liable to be taxed on, saving them up to £252 per year.

It is important to bear in mind that this transfer reduces the personal allowance of the lower-earning partner by the same amount, meaning that if they earn over £11,310, they are liable to pay tax.

Despite this, it is often still worth the transfer, as the lower-earning partner will still be paying a lower amount of tax, and it will contribute to an overall saving for both partners.

How do I get it?

You can apply for Marriage Allowance on the Government website if you fit all the criteria mentioned above.

If you or your partner were born before 6 April 1965, you may benefit more by applying for Married Couple’s Allowance instead.

It is also possible to backdate the claim to include any tax year from 5 April 2019, meaning that you and your partner can get further reductions to your tax bill.

If you are unsure whether the Marriage Allowance will benefit you and your partner, get in touch with our experts today for help and advice.