# 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... Mar 24, 2021 at 16:28
• I see - I thought a "personal finance & money" stack exchange would be a reasonable place for such a question. Mar 24, 2021 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 Mar 24, 2021 at 21:52
• Okay, we'll I'll leave it up just in case, whilst I search for an accountant. Mar 25, 2021 at 9:59