By Michelle Quince, Senior accountant at Hive Business

Another 5th April has passed and so we start a new tax year. With 2017/18 comes changes to the national living wage (up to £7.50 per hour for those aged over 25) and for those businesses with very, very large wage bills, the requirement to pay an apprenticeship levy. And, as always with a new tax year, the tax allowances have been revised and you can now earn £11,500 without paying any tax.

But what do the new allowances mean to those of you drawing a tax-efficient Director’s salary from your Company?

Your salary for the past couple of years has probably been set at £670 per month, but because of the new allowances, you can now earn £680 per month without paying any tax or national insurance. At this rate you will still build up rights to benefits like the state pension, as you will be earning more than the lower earnings limit (£490 per month).

If we prepare your payroll, we will automatically revise your salary for you but if you have your own arrangements, you should consider adjusting your salary accordingly to ensure you are making use of all the available allowances.

Please note that this is not a one size fits all scenario. You should always discuss your personal circumstances with your accountant to determine what works best for you. If we are your advisors and you’d like to discuss this further, please call us on 01872 300232 or email us at hello@hivebusiness.co.uk.