When the aim is to minimise your personal tax burden the interaction of different pieces of legislation can sometimes be overlooked and this is just one of those cases.
The latest interpretation of this legislation states that if a company director wishes to claim Working Tax Credit he/she should enter into a formal contract of employment with the company, [a matter often overlooked in many owner/managed companies]. Where a contract of employment exists, then the rate of pay must not be below the National Minimum Wage [currently £5.52 per hour increasing to £5.73 per hour from 1st October 2008] for the hours worked.
For example, a director claiming Working Tax Credit should be paid a salary along the following lines;
35 working hours per week = salary of approximately £10,500 pa.
40 working hours per week = salary of approximately £12,000 pa.
If you are concerned and think that this could affect you then please give one of the team a call to discuss the implications for you, if any.
Date:25 September 2008
|
