Salary vs Dividend graphs for a one man limited company

April 17th, 2012

Just for fun (and because I couldn’t find these anywhere) I’ve made some graphs showing the effects of different salary and dividend combinations on the amount of money you can move from your limited company into your personal account.

There are some assumptions I’ve had to make.

  • This is for the 2012-2013 tax year.
  • These figures are for a VAT registered company (standard VAT scheme, not flat rate), so turnover is net of VAT.
  • No expenses or pension contributions are accounted for.
  • You withdraw all retained profit (after paying salary and corporation tax) as dividends.
  • Corporation tax is deducted at the small companies rate of 20%.
  • You are under 65 and have the default personal allowance of £8105.

I’ll point out that I’m not an accountant so I don’t guarantee any kind of accuracy, but I’ve cross checked some of the figures against a few of those tax calculators that many accountancy companies have on their website and they seem to fit.

Salary vs money extracted from company

This graph shows how much money you could get out of your company depending on turnover and what salary you set yourself. By ‘take home money’ I mean the salary plus dividend remaining after all taxes have been paid. In other words the money that is left for you to spend.

contractor take home pay vs turnover

The lines stop at the point where the maximum amount of money has been extracted from the company.

Here is a simplified version just showing a turnover of £60,000. Note that the y-axis starts at £30,000.

contractor take home pay vs salary

You can see that your extracted money goes up at first as your salary increases because you are making use of your personal allowance. Then it hits a very obvious peak after which income tax and national insurance kick in.

The maximum amount of money extracted is reached by paying salary at the national insurance secondary threshold level which is £144/week or £624 per month giving an annual salary of £7488.

In the above graph you can see that someone can take nearly £47,000 net out of the company. By doing this they dodge all national insurance payments, but as they are paying a salary above the lower earning limit they still get a full national insurance contribution record for the year. Their contribution is therefore subsidised by other workers who are paying national insurance. Is this a fair system? Probably not; a standard full time employee would have to earn about £69,000 gross and pay over £4500 in employee national insurance contributions to get this level of net income. However as long as this form of tax avoidance is legal you can’t really blame people for doing this.

Perhaps linking national insurance contributions to income with an upper cap would be a more effective way for HMRC to collect their NI money from everyone who can afford it.

Dividend vs salary with all taxes

This chart shows all the PAYE, corporation and dividend taxes. You might spot that the ‘Take home money’ and the ‘Total Tax’ are perfect mirror images of each other, and the two together add up to the turnover.

contractor tax salary dividend

The dividend is the declared dividend paid to you which doesn’t include the 10% tax credit. At the start of the graph the dividend is above the ‘take home money’ because part of the dividend is then taxed at the higher rate.

And because the taxes are squashed at the bottom here is a more zoomed in version.

contractor tax breakdown

The total tax is including the employee PAYE, the employer NI, and any extra tax due on dividends. You can see that if you increased your salary from the secondary threshold level of £7488 to £15,000 you and your company would be paying an extra £1500+ of tax.

The final graph shows the income tax and national insurance.

contractor paye taxes

I hope this is all correct – if you spot any mistakes do let me know and I’ll fix them.

2013 one page Excel calendar

April 12th, 2012

I’ve started getting requests for a 2013 version of my one page Excel calendar, so here it is! If you want the previous 2012 one page Excel calendar click on the link.

2013 staff holiday calendar

As always you get the whole year in a very simple one page Excel spreadsheet. There are two versions. One is plain, the other has the UK bank holidays marked.

2013 one page Excel calendar – blank
2013 one page Excel calendar – with UK bank holidays

You should be able to load the XLS using any version of Microsoft Excel from 97 onwards, or using the free OpenOffice or LibreOffice.

The one page Excel spreadsheet calendars are zipped up. If you OS won’t automatically open the zip files you can download the free 7-Zip to unzip them for you.

Thomas Exchange UK Maddox Street

March 19th, 2012

I’ve previously reviewed Thomas Exchange Global on The Strand, and Thomas Exchange Global on Victoria Street which are both part of the same company. This time I’m reviewing Thomas Exchange UK on Maddox Street, which despite the very similar name is (as far as I can tell) a completely separate company. As before I needed to buy Yen for one of my trips to Japan.

It is located on a fairly quiet street in central London so you probably aren’t going to come across it unless you make a special trip. Like the other two places I’ve reviewed it is usually listed as one of the best places on the Martin Lewis Travel Money Max website.

thomas exchange uk maddox street

On arrival I told the man at the counter how many Yen I wanted to buy and gave him my cash. Unlike in the other two places where my money was counted in front of me, he went into a back room to do the counting.

This meant that I was left without my Pounds, Yen or any proof that I’d given him my money whilst he was dealing with it. It took him 2-3 minutes to come back. When he did he gave me the correct amount of Yen which I double checked before leaving.

The two Thomas Exchange Global’s I’ve visited were both in very busy locations with a lot of customers. This foreign exchange shop was quieter both in terms of location, and in the shop itself.

Apart from the slight worry caused by my money being taken out of my sight everything went smoothly and I’d be happy to use this branch again.

Thomas Exchange UK is at 13 Maddox Street, London, W1S 2QG.


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Rainbow Carpets on Westbourne Grove

March 16th, 2012

When I needed two new carpets I decided to try a local carpet shop rather than using one of the big chains.

rainbow carpets westbourne grove

I visited Rainbow Carpets (which also trades as AA Flooring) on Westbourne Grove in Bayswater. On my first visit I asked some questions about their service. Here is a summary.

  • Measuring – free.
  • Delivery – free.
  • Delivery time – usually delivered/installed within 2-3 days if the carpet is in stock with the supplier. They deliver and install the carpet at the same time.
  • Install charge – £5 per square metre.
  • Carpet grippers / edging strips – included in the price.
  • Underlay – I didn’t ask about underlay as I’d already fitted QuietFloor Plus sound proofing underlay.

First carpet

I arranged for a measuring of one of my rooms which was done a few days later. The guy arrived on time and it took less than 10 minutes to measure up and answer some more of my questions.

A few days later I went back to choose the carpet. Because of a previous experience with clothes moths I explained that I was only interested in 100% synthetic carpets. The shop will let you borrow carpet samples for a short time as long as you have already had the measuring done first.

I borrowed two samples, both made of polypropylene. It is well recommended to see the samples in the light of your own home rather than in the carpet shop. They can look very different when viewed at home.

I decided on the more expensive of the two and went back to place the order. They were able to order it for the next day but I delayed the install until the week after as I hadn’t yet finished my sound proofing. I also had hired a door trimming saw for later in the week. They told me in the shop that they could trim the doors for £10 each but I decided I’d rather have a go myself.

You have to pay 50% in advance and 50% on completion.

The delivery / installation day arrived and they arrived on time in their van. Two of them unloaded and unpacked the carpet. They did have to fold it to get it in the lift but that didn’t affect the final finish of the room.

rainbow carpets westbourne grove 1

One of the guys remained to do the install, first putting down the new carpet grippers and then fitting the carpet. It took him about 1.5 hours to do.

He asked if I wanted the offcuts to be taken away. I decided to keep one reasonable sized rectangular section in case any future patch repairs were needed, and told him he could take the rest away.

After finishing there were lots of cutting fibres all over the carpet but he advised me to wait a few hours before vacuuming them up to let the carpet settle. Below is a before and after photo. After vacuuming the room looked great! The colour is called ‘claret’.

rainbow carpets westbourne grove 2

There were a few minor chips in the skirting board paint from where the bolster was used to tuck the carpet into the gap after the carpet gripper but this is to be expected. These are easily solved with a quick paint touch up – remember to save some of your skirting board paint for this.

The agreement you sign says that you are supposed to pay the fitter after installation but I told him that I wanted to pay by card and so would go the the shop in the next hour to do so. He had to call the shop to check that was ok – which it was.

I paid, got my payment receipt and then thought about the second carpet.

Second carpet

The procedure with the second carpet was the same as with the first. They measured the room; I borrowed some samples, and then chose the carpet. I visited them on a Saturday so they told me they’d have to wait until Monday before they could order the carpet from the supplier.

I called them on Monday to check it had been ordered and then I could start moving the furniture. They confirmed it would be delivered / installed the next day as requested.

Large chains such as Carpet Right often have lead times of 7-10 days whereas these guys can do the whole order/deliver/install cycle in 48 hours. It is definitely worth considering a small independent carpet shop if you want your carpets fitted to a shorter timescale.

As before the guy did a good job with fitting the carpet. I’d make it easy for the fitter by fully clearing out the rooms before he arrived, but the measurer did tell me that they were able to move objects like beds or sofas if necessary.

In conclusion

The service was good, the installation was fast, and there were no problems.

Rainbow Carpets are located at 58a Westbourne Grove, Bayswater, London, W2 5SH.

Fixing squeaking floorboards

March 6th, 2012

Floorboard squeaks and creaks can be very annoying but there are a few ways you can try to fix them.

Screwing floorboards down

If individual floorboards are squeaking one potential solution is to screw them down to the joists. You’ll need to locate where the joists are. This is usually very easy as you can see the existing nails/screws that are holding the floorboards to the joists.

When screwing into floorboards you need to be very careful to avoid any water/gas/electricity supply cables/pipes. You can use a pipe detector to help you locate them.

If you put screws very close to the existing nails there is less chance of hitting anything important.

I used a mix of 1.5 inch and 2 inch wood screws. They need to be long enough to go through the floorboard and into the joist.

After locating which floorboard was squeaking I drilled a pilot hole. I used a drill bit with an attachment that drills the countersink at the same time. I set the height of the countersink so that the drill bit would just drill through the floorboard, and not into the joist.

fixing squeaking floorboards 1

Then I could pop the screw into the hole and use another drill to drive it into the joist. It can be very useful to have two drills, one for drilling holes, and one for screwing down the screws. This can save a lot of bit swapping.

fixing squeaking floorboards 6

I found this method to be effective where an individual floorboard was squeaking. I didn’t find it helped in the case where a joist was squeaking.

Expanding foam filler

Where an individual floorboard was squeaking the noise was limited to that floorboard. In some cases the squeak was activated across the joist along a series of floorboards. For these squeaks screwing down the floorboards didn’t seem to remove the squeak as it didn’t prevent the joist from moving.

I tried a different technique. I got some large expanding foam filler canisters. Either 750ml or 825ml. These cost from £8-£11 each.

fixing squeaking floorboards 4

I then drilled a hole next to the creaking joist big enough to fit the expanding foam nozzle into. This hole does not go into the joist, it goes into the cavity next to the joist. As this is drilling into the floor cavity you have to be especially careful not to hit any pipes or wires. Make sure you use a pipe detector, and don’t drill any further than the depth of the floorboard. You can see a typical hole that I drilled in the photo above.

I sprayed in a bit of water (the instruction on the expanding foam say this is necessary for the foam to cure).

fixing squeaking floorboards 2

Then after shaking the can I sprayed the full contents of it into the cavity. Then I left the foam to harden for a few hours. This technique has successfully removed the squeaks from my floorboard joists.

fixing squeaking floorboards 3

It may be a good idea to wait a few weeks before putting down any flooring in case you find any other areas that need treating.

I’m guessing this technique works by immobilising the joist and the surrounding floorboards. If the foam stops the floorboard/joist from moving then there is no sound.

The space under my floorboards is very small – it is only about 4 inches. This technique may well not work if the space under yours is much larger.

I’m also not sure how long term this solution is. It has now kept the squeaks away for about one month. It is possible that over time the foam will compress and the floorboards will start moving again. I’ll update this post some time in the future with more results.

Argos shoe rack

March 5th, 2012

I bought a 4 tier flat pack shoe rack from Argos. Here’s a link to it on their site, and below is a photo of what it looked like after I assembled it.

argos shoe rack 7

As with much of this cheap Argos / Ikea flat pack furniture assembling it was not as straightforward as it should have been.

The problem was that over half of the pilot holes on the end slats had been innacurately drilled. They were drilled too close to the edge. There are other reviews on the Argos website that point out the same problem.

argos shoe rack 1

If you try to drive the supplied screws into one of these holes which is too close to the edge the wood splinters.

argos shoe rack 3

The only solution is to redrill the pilot holes at the correct position. I worked out that for this item that the holes should be slightly off-centre. I used my Challenge Xtreme 18v cordless drill (also from Argos) to do this. Here are my re-drilled slats.

argos shoe rack 4

I could then start assembling. There are 56 screws so you’ll really want to use a cordless screwdriver / drill to drive them in rather than using a manual screwdriver.

argos shoe rack 2

I did the end pieces first, and then put the long slats in before turning it over to do the other end.

argos shoe rack 6

It is best not to tighten the screws too much at first until you have checked that all the slats are correctly aligned. Once they are correctly aligned then you can do the final screw tightening.

argos shoe rack 7

Splashing kitchen tap

March 3rd, 2012

My kitchen tap generates a lot of spashing water when it is turned on. This is because a single solid tube of water pours out of it. Even when the tap is only lightly turned on a lot of water splashes up over the draining board and work top.

I used to think there was nothing that can be done about it until I became aware of ‘tap aerators’. These inserts work by mixing air with the water to make it more bubbly and reducing the pressure of the water stream.

Instead of a solid jet of water, with an aerator you get a bubblier softer stream of water.

In order to be able to fit an aerator the end of the tap will need to be removable. I used an adjustable spanner to get the end off as it was tighely screwed on.

water tap aerator 5

Here is the old insert. To work out what size of aerator you need you’ll need to carefully measure the diameter of the thread. Mine was 22mm.

water tap aerator 3

I ordered this 22mm aerator from Amazon, and it arrived the next day. It arrived in a tiny package with no instruction, but it isn’t too hard to figure out how to assemble it.

water tap aerator 2

I put the above pieces together like this:

water tap aerator 4

Then I screwed it into the tap and gave it a test. It did aerate the water and reduce the splashing but there was an obvious leak around the edge of the insert. One of the reviews on the Amazon produce page also mentions this problem. It could be due to the short thread length, or because my tap doesn’t have anything inside it for the supplied washer to compress against.

I solved the leak with PTFE tape. An essential item if ever you are doing minor plumbing work.

water tap aerator 6

I wrapped about 40 cm of the tape around the thread and then trimmed the top bits so they didn’t block the flow.

water tap aerator 7

I then screwed this back into the tap whilst it was turned on until it was far enough screwed in to create a proper seal.

And here is the final result. On the left you can see the original water stream. It is clear because it is pure water. On the right is the aerated stream which is cloudy as it is mixed with air bubbles.

water tap aerator 1

The reduction in splashing has made this a worthwhile purchase, plus the chrome colour of the aerator cover looks much better than my old black plastic tap end.

Door trimming saw

March 2nd, 2012

If you are installing a new thicker carpet, thicker underlay, or wood flooring you may find that your doors need trimming for the flooring to fit underneath.

There are several ways to do this:

  1. Remove the door from its hinges and cut it using a hand saw or circular saw.
  2. Cut it in place using a hand saw or circular saw.
  3. Use a special purpose door trimming saw.

I decided to trim mine using a door trimming saw. These are expensive to buy, and you aren’t going to use them much, so it can be a lot cheaper to hire them. I hired one for the day from HSS hire. Here is a link to the door trimming saw I hired for £36.84 (the prices on their website don’t include VAT).

I had to order it a week in advance as they said it was a very popular item and fully booked.

Here is what the saw looks like. It is a circular saw with a very thick enclosed blade. It is designed to be slid along a flat floor, and the 4 screws at the corners near the bottom allow the height of the blade to be modified.

hss door trimming saw 1

The blade comes out of the front when you push the spring loaded handle forward. The amount the blade comes out is only just enough to cut a standard door, so you will have to keep it fully pushed forward to make the cut.

hss door trimming saw 2

Each of the 4 height screws has measurements on it so it is easy to set the saw to the correct level.

hss door trimming saw 3

There is a vacuum port to suck the sawdust away, but I found that my Dyson hose was the wrong size to connect to it. I got around this by using masking tape to connect the hose to the door trimmer.

hss door trimming saw 5

To help prevent the bottom of the door from splintering I wrapped masking tape around it.

hss door trimming saw 4

Then I started using the saw. First turning on the vacuum, then the saw. When it is at full speed you can begin cutting. You should check the instructions to make sure you cut in the correct direction. In the case of the saw I was using the cut had to be made left to right.

The saw is very noisy and even with the vacuum sucking away most of the sawdust there was still enough dust in the air to set off the room’s smoke alarm! Because the blade is enclosed and hidden away from your face it should be fairly safe to use, but you should still wear safety glasses in case you get a rogue flying splinter.

It took about 3 minutes to cut each door by sliding the saw slowly from left to right. I found that it won’t get close enough to the door frame to cut the very edge, so I had to do the final 1cm with a hand saw. I could then finish off by giving the edges a quick sand, and then repainting any bits where the paint had flaked off.

hss door trimming saw 6

Even with the vacuum running there was still loads of sawdust on the floor. Here are some of the pieces that were cut off the three doors that I did.

hss door trimming saw 7

It is still hard work to push the blade through the doors, but much easier and more accurate than using a hand saw.

Removing carpet grippers from floor boards

February 12th, 2012

If you are completely re-doing the flooring of a room (to go from carpet to wood flooring, or to lay sound proofing for example) you might need to remove the old carpet grippers. Here is how I removed the carpet grippers in one room. I used:

  1. A chisel with a fine sharp end that could get under the carpet gripper
  2. Another item to use as a fulcrum under the first chisel. I used a smaller chisel but I could have used anything of similar size and solid such as a screwdriver or piece of wood or metal.
  3. Safety glasses. A lot of DIY guides say to use safety glasses but of course you never do. In this case you really should – especially when removing smaller strips of carpet gripper. They are covered in sharp nails, and they can fly off the floor when levered up. I’ve had some that have shot up well above the height of my face when they suddenly pop out of the floor.

removing carpet grippers 3

The method I used was to start at one end of a carpet gripper machine and push the sharp end of the chisel under the first nail. The using the other chisel as a fulcrum I slowly levered the nail out.

removing carpet grippers 1

If the gripper is really tight on the floor board you might need to hammer the chisel gently to get it below the gripper, but I never needed to do this. In all cases I was able to push the end of the chisel under the gripper a little by hand, and then work the nail out.

Then I moved onto the next nail. I found that on a strip of carpet gripper the first nail might take about 5 seconds to get out, but then the next ones might take 2-3 seconds. I was able to remove the grippers pretty quickly, and intact using this method.

removing carpet grippers 2

It is even possible to reuse the carpet grippers after they have been removed using this method, but because the nails are now pushed down, and slightly curved after being removed they are a bit arkward to hammer back down. New carpet grippers are really cheap so it is probably less hassle to buy new ones than to attempt to reuse them.

If you do want to reuse them then I’ve found it is easier to remove the fixing nails and then use new nails/screws to secure them. To remove the nails I used some combination pliers to push the nail up a bit, and then some diagonal pliers to twist and pull the nail out. I can get each nail out in about 10-15 seconds doing this. Wearing thick gloves on the hand holding the carpet gripper will stop you cutting yourself.

Ikea assembly service

January 24th, 2012

My flat is full of Ikea furniture. And until now I’ve assembled it all myself. I’ve either had it delivered by Ikea themselves, or used one of the taxi vans outside the store to get it back.

For my new Ikea PAX wardrobe I decided to get it assembled for me. The main reason is because of its size and weight. The wardrobe is 236cm high and 200cm wide, made up of two 100cm wide parts.

Each wardrobe half is 56kg and needs to be assembled on the floor before being raised to vertical. It has two sliding doors which are each nearly 30kg each. These need to be assembled on the floor before being lifted onto the frame.

ikea pax wardrobe assembly service 3

Because of the size and weight, this wardrobe needs two people to assemble it. As I didn’t want to risk my life by assembling it myself I started researching Ikea assembly services. There are lots of flat pack assembly companies around the London area.

eXpress Wardrobe

I decided to try eXpress Wardrobe whose slogan is “No More DIY Torture”. I sent them my Ikea list giving them the names, article numbers and prices of everything I wanted.

  • PAX Wardrobe with sliding doors, oak effect, Malm mirror glass/oak £465 (£120 * 2 + £345) / 801.215.31 * 2 (oak frame) / 801.830.05 * 1 (oak sliding door with mirror) / http://www.ikea.com/gb/en/catalog/products/S29875492/
  • KOMPLEMENT clothes rail £8 / 601.411.63 * 2 / http://www.ikea.com/gb/en/catalog/products/60141163/
  • KOMPLEMENT shelf (2 pack) £42 / 601.215.27 * 3 / http://www.ikea.com/gb/en/catalog/products/60121527/
  • KOMPLEMENT drawer £88 / 901.214.46 * 4 / http://www.ikea.com/gb/en/catalog/products/90121446/

Two days later they sent me an Ikea shopping list via the Ikea website and also their quote. The Ikea parts cost £603, and then they quoted £85 for pickup and delivery, £20 extra because I’m on a higher floor (the large items won’t fit in the lift) and £97 for assembly.

I agreed to their quote and gave them three suggested days for that week. A day later they confirmed that they could make one of the days and so I paid my 35% deposit. The 35% is calculated on the cost of the Ikea items, not the pickup/delivery/install charge.

Before the delivery day I cleared the room so they would have as much space to assemble as practicle. Here is the big empty space waiting for my wardrobe.

ikea pax wardrobe assembly service 1

Delivery / assembly

They had agreed to arrive between 9:30am and 10:30am. At 9:48am they sent me a text to say they were running late and apologising for this. They said they’d be here between 11am and 12:00.

At 11:30am their van arrived and they started unloading the parts from their van. By 11:45am they’d started bringing the things through my door (it is a bit of a trek up the stairs to the flat).

ikea pax wardrobe assembly service 2

Before they started assembling I asked them to let me know when the frames were vertical so I could get them positioned in the correct place, and they later checked which positions I’d like the drawers to be placed at.

There were two of them and they very quickly had the PAX wardrobe frames in place and positioned according to where I wanted them. They then spent their time assembling the sliding doors which are clearly the more complicated part of the wardrobe.

They both worked hard to get it finished and were polite when they needed to speak to me. They must have done plenty of these PAX wardrobes before as they didn’t need to reference the manual.

By 1:20pm they had both doors on and were assembling the 4 drawers. And by 1:45 they had left leaving me with my giant new Ikea PAX wardrobe.

ikea pax wardrobe assembly service 3

Above is the outside and below is half of the inside. I didn’t know at exactly what height I wanted the clothes rail or final two shelves to be placed so I wanted to put them in later rather than having them fitted.

ikea pax wardrobe assembly service 4

Finishing off the wardrobe

To save a tiny bit of money I’d told them when requesting the quote that I’d do the wall mounting myself. I did the wall mounting and then made a few finishing touches to the wardrobe.

  • I stuck some extra buffer pads inside the sliding door so that the doors are quieter when opened.
  • I screwed in some corner braces under the bottom shelves so that they can take more weight. The 6 plastic shelf holders that Ikea supply for the shelves look a bit flimsy.
  • I oiled the sliding door, and sliding drawer mechanisms. Better to oil the drawer mechanisms before the drawers start filling up.

Paying and conclusions

I chose to pay via bank transfer rather than PayPal / Google checkout. There is a 3.5% surcharge for PayPal / Google checkout payments so it seems more sensible to pay direct.

The amounts I paid were:

  • Ikea shopping list: £603 (35% of this paid in advance as a deposit)
  • Pickup and delivery: £85
  • Higher floor surcharge: £20
  • Assembly: £97
  • Parking: £7:40

Total = £812.40

They had done a good job with assembling the wardrobe. It looked the way I wanted, was where I wanted, and had required very minimal effort on my part. I’d certainly use them again if I ever buy another piece of flat pack furniture which is too large for me to assemble myself.

The only work I was left with was squashing and putting all the cardboard boxes in the recycling (they don’t take away your packaging).

You can find out more about eXpress Wardrobe’s service on their website at http://www.expresswardrobe.co.uk. They also have some great speeded-up assembly videos on their YouTube channel if you want to see them at work.