Director's Remuneration & PAYE

[sueg12]

Would appreciate some clarification on PAYE please, if anybody can help. My business is 18 months old and the first year's accounts have been drawn up. They show a small loss, but include a Director's Remuneration of £8k which I haven't taken (I am the sole director). Apparently, there is now PAYE due on this remuneration even though I have never received it. When I started the business my accountant suggested I take a small salary to keep my NI contributions up to date, but do I still need to pay PAYE if I haven't actually had any salary? I'm very confused!

 

[Mr D]

How are you keeping your NI payments up to date?

 

[sueg12]

How are you keeping your NI payments up to date?

Before I started my business I was self-employed for a couple of years and paid my NI payments. Prior to that I had a 17 year career break(!) so made no payments.

 

[Scalloway]

Your accountant will have put through the remuneration to reduce taxable profits and included it as a director's loan. This is beneficial in two ways.

• The company pays less tax
• You have a sum of money available to withdraw at a later date with no further tax consequences.

 

[sueg12]

Your accountant will have put through the remuneration to reduce taxable profits and included it as a director's loan. This is beneficial in two ways.

• The company pays less tax
• You have a sum of money available to withdraw at a later date with no further tax consequences.

That's what I was assuming, even though we have made a small loss. I'm just a bit peeved to have to stump up PAYE on remuneration that I haven't had!

 

[DWS]

What PAYE do you owe if only £8k was taken? Or do you have other income?

 

[Mr D]

Before I started my business I was self-employed for a couple of years and paid my NI payments. Prior to that I had a 17 year career break(!) so made no payments.

No, sorry, I mean now.
The reason to do a certain level of low income is to get NI credit. Whether you take the money out there and then or leave it in as directors loan - later to be taken tax free - is up to you. But how are you notifying the NI credit?

 

[MyAccountantOnline]

Would appreciate some clarification on PAYE please, if anybody can help. My business is 18 months old and the first year's accounts have been drawn up. They show a small loss, but include a Director's Remuneration of £8k which I haven't taken (I am the sole director). Apparently, there is now PAYE due on this remuneration even though I have never received it. When I started the business my accountant suggested I take a small salary to keep my NI contributions up to date, but do I still need to pay PAYE if I haven't actually had any salary? I'm very confused!

If the company paid you a salary (regardless of whether you took it, or it was left as a loan in the company) if PAYE is due on that salary it does need to be paid.

Ask your accountant why they recommend you take a salary from a loss making company which created a PAYE liability for you.

 

[Newchodge]

You should have had a tax free allowance in each financial year, and you would only owe PAYE if you went over that allowance, or had other PAYE income in that financial year.

Is this, perhaps, NI that is due? Who ran your payroll? What are the dates of your first financial year?