Master Your Finances Pay Yourself a Salary and Save on Taxes

6 Aug 2023 · 1 min

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In this segment, the speaker advises UK business owners to run a monthly payroll for themselves, whether they handle it personally or through an accountant/bookkeeper. By doing so, owners know exactly how much they can pay themselves and receive immediate reports on the tax, National Insurance (NI), and student loan deductions that need to be set aside each month. This regular saving of tax liabilities helps keep the business prepared for tax payments. The speaker explains that if an owner is currently paying themselves £1,000 per month, they can request a higher salary from their accountant, though the accountant may warn that a higher salary could increase the year's tax burden. The overall message encourages using monthly payroll to manage cash flow, tax obligations, and salary adjustments proactively.

Chapters

If you pay yourself a salary and you, you, you or your accountant or bookkeeper run your payroll monthly, it means that one, you know exactly how much you can pay yourself, and two, you immediately get a report which says how much tax you need to set aside and how much National Insurance contributions and student loan deductions you need to set aside if you've got them. So you can put those aside each month. It teaches you to save your tax, and that is really beneficial as a business owner because it means you're prepared. So that's the first thing just to bear in mind. So If you're paying yourself £1,000 a month at the moment, and your accountant will be telling you to do that, I can guarantee it— by the way, you don't have to listen to the advice your accountant gives you, but if you want to pay yourself more money from your business, you just need to instruct your accountant that this is what you want to do. They may push back, they may say this will mean you're going to pay more tax this year.