It is your choice what level of director’s fee you wish to set for the 2023/24 tax year. If you set your director’s fee at the personal allowance threshold, this equates to £241.73 per week or £1,047.50 per month.
The reason for recommending this amount is that you can apply for the Employment Allowance, which can reduce your company’s Employer’s NI liability up to £5,000 – but only if you have one or more employees paid over the secondary NI threshold of £175 per week and your National Insurance bill was below £100,000 in the previous tax year.
Therefore, if you have more than one employee, this means you can receive £12,570 free of income tax and you do not incur Employee’s National Insurance ( as the Employee’s primary threshold is also set at £12,570.) As a result of the employment allowance, you do not incur Employer’s National Insurance. The corporation tax relief on this amount ( if your profits are less than £50,000- but will be higher if profits are in excess of this) is £2388. Compare this with setting your director ‘s fee at the secondary threshold of £9,100. There is no income tax or Employee’s National Insurance to pay- but your corporation tax relief is only £1,729.