Help on calculating national insurance obligations as a director of a UK based limited company

For the Jan 2020 to Jan 2021 I was working and being paid in the US. All tax etc. was paid in the US. I came back to the UK and started a business - a limited company where I am director and only employee. The business has been active from 01/01/2021.

Since Jan 2021, my business has been paid exactly `£14,500`. I need to verify that what I'm doing with this in regards to UK tax obligations is correct. So here it goes:

We are entitled to `£2K` dividens tax free for the tax year 2020-2021. Since I am yet to collect any dividens for this tax year, I will take the `£2K`.

``````£14,500 - £2000 = £12,500      [point 1]
``````

The remainder I intend to pay myself as salary, using my personal tax allowance for the year April 2020 to April 2021. Since I was an employee in the US, playing by US rules during April 2020 to end of December 2020, I have not taken any of my `£12,500` personal allowance. So, no income tax is due `[point 2`].

Now I need to work out how much national insurance is due. Based on this information, anything less than `£6475` requires `0%` national insurance, then, if you earn more than this in a year you pay `£3.05` per week and between `£9,500` and `£50,000` is and additional `9%` on top of the fixed weekly amount. `[point 3]`

So, `£3.05 * 52 weeks = £158.6`. This amount is basically fixed and not dependent on amount earned, since all bands need to pay `£3.05` a week. `[point 4]

Now, `£6475` is free from national insurance. `[point 5]`

For the next `£9,500 - £6475 = £3025` its £3.05 per week and so accounted for by `[point 4]`. `[point 6]`

This leaves `£12,500 - £9,500 = £3000` where the rate is `9%`. `£3000 * 0.09 = £270`.

Therefore the total amount of national insurance due is `£158.6 + £270 = £428.6` and I can pay myself `£12,500 - £428.6 = £12,071.4` as salary.

I'd be very greatful if somebody would verify my calculation here so that I do not inadvertently do the wrong thing.

• Sounds like a question for your accountant... – AakashM Mar 24 at 16:28
• I see - I thought a "personal finance & money" stack exchange would be a reasonable place for such a question. – CiaranWelsh Mar 24 at 20:31
• You might well get answers here but imx people who consult (a guess) through their own limited co generally have, or have access to, an accountant – AakashM Mar 24 at 21:52
• Okay, we'll I'll leave it up just in case, whilst I search for an accountant. – CiaranWelsh Mar 25 at 9:59