It is usually advantageous to pay a wage just above, rather than just below, the Lower Earnings Limit:
There is a band of earnings which are subject to ‘nil rate National Insurance contributions’ – this apparent contradiction in terms means that no contributions are payable, by employee or employer, but the employee’s contribution record is still franked for pension and benefit purposes. For 2009/10, the ‘nil rate band’ runs from the ‘Lower Earnings Limit’ of £95 a week (£412 a month) to the ‘Earnings Threshold’ of £110 a week (£476 a month).
Where family members work part-time in a family business, it is important to remember that worthwhile pension rights can be accrued, at no cost, by paying them a salary just over, rather than just under, the Lower Earnings Limit. If you are already doing this, watch that the Lower Earnings Limit rises slightly each April – this year from £90 to £95 a week – so you must remember to increase wages accordingly.
[ add comment ] ( 52 views ) | permalink
Calendar
