Director's pay help please

[NickyElectric]

Hi

Can someone please help me with my payroll issue:

I am the director of my company, that has been established since February 2010, but I am only starting to pay myself this month.

I have a P45 from April 9th 2010, and I have set up the HMRC software, and entered all the details, as per instructions. (Tax code is 647L and National Insurance Category is A)

When I enter my gross pay (I'm only taking £750 to start with) and view the P11 and P32 summaries, I don't see what PAYE or NIC to pay - it's all zero. Does this mean there's nothing to pay because I'm on the Director's cummulative NICs?

Any advice would be greatly appreciated, or if someone can tell me how it costs to carry out this type of payroll service maybe I should take that option..

Cheers

Nicky

[David Richards]

Unfortunately there isn't enough information to give you a specific answer answer; the amounts due depend on what tax you've already paid, which tax period you're paying yourself for and when you were appointed a director.

But in general terms for 2010-2011; a director who has been a director for the entire tax year will not pay any NI until their NIable earnings are £5,715 for the year. And someone on a tax code 647L in tax month 6, would need to have earned more than £3,240 so far this year before any tax is due.

[MyAccountantOnline]

Hi Nicky

As an aside have you discussed taking a salary with your accountant yet?

Its generally best to pay a salary of £5715 pa and draw other funds as dividends to avoid paying unnecessary tax:)

[NickyElectric]

Thanks for your quick replies David and Nicola

I think I understand it a bit better, and a chap PM'd me and is going to check out my backup.

Thanks for that tip Nicola J - coincidentally I'm an Nicola J too - what are the chances :)

[MyAccountantOnline]

Thanks for your quick replies David and Nicola

I think I understand it a bit better, and a chap PM'd me and is going to check out my backup.

Thanks for that tip Nicola J - coincidentally I'm an Nicola J too - what are the chances :)


Not sure on the odds on that one - but if you are also Jones I think I'll buy a lotto ticket:D

[NickyElectric]

Not sure on the odds on that one - but if you are also Jones I think I'll buy a lotto ticket:D

No, afraid not, Nicola Jane (middle name), but get one anyway - you never know your luck :)

[elainec100@cheapaccounting]

Likely to be because you are on cum NI and haven't earned anything since April.

Just to point out that paying yourself £750 / month may not be the most tax efficient way, see here on salary v divs:

http://www.franklyaccounts.co.uk/fivesalary.php

Best to discuss this with your accountant to agree the tax strategy before you get too far into it.

Good luck

[Tom McClelland]

Hi

Can someone please help me with my payroll issue:

I am the director of my company, that has been established since February 2010, but I am only starting to pay myself this month.

I have a P45 from April 9th 2010, and I have set up the HMRC software, and entered all the details, as per instructions. (Tax code is 647L and National Insurance Category is A)

When I enter my gross pay (I'm only taking £750 to start with) and view the P11 and P32 summaries, I don't see what PAYE or NIC to pay - it's all zero. Does this mean there's nothing to pay because I'm on the Director's cummulative NICs?

Any advice would be greatly appreciated, or if someone can tell me how it costs to carry out this type of payroll service maybe I should take that option..

Cheers

Nicky

As you left your previous company in the first week of the tax year your P45 probably has little or no pay for this tax year, so it wouldn't surprise me at all that you're not paying any tax yet if you're only paying a salary of £750 now because you'd have 6 months of tax allowances already (ie about £3240)

And as a director you'd not pay NI until you've earned (cumulatively) above the annual NI earnings threshold, which is about £5715.

[MyAccountantOnline]

No, afraid not, Nicola Jane (middle name), but get one anyway - you never know your luck :)

Will do:):)