NI when changing jobs

Discussion in 'Accounts & Finance' started by NortonBishop, Jan 20, 2020.

  1. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    My partner left the company she worked for in May 2109 and in this tax year earned £15k. She now has a limited company, with her as sole shareholder and director, and wants to be paid £8500 in salary before the end of the tax year. Will she have to pay Employee's NI on that amount?

    I read something to suggest that a new employer (in this case, her own company) brings with it a fresh employee's NI allowance. Does anyone have any thoughts on that please?

    The company will also be making a £20k company pension contribution to her SIPP.

    Thanks in anticipation...
     
    Posted: Jan 20, 2020 By: NortonBishop Member since: Sep 26, 2019
    #1
  2. mattk

    mattk UKBF Newcomer Free Member

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    She will have to pay NI as it is cumulative.

    The company will also have to pay Employer's NI as well.

    Don't forget, she will have an annual tax free dividend allowance of £2,000.
     
    Posted: Jan 20, 2020 By: mattk Member since: Dec 5, 2005
    #2
  3. Newchodge

    Newchodge UKBF Big Shot Free Member

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    NI is not cumulative.

    What date did she become a director?

    Is she the sole employee of the limited company?
     
    Posted: Jan 20, 2020 By: Newchodge Member since: Nov 8, 2012
    #3
  4. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    Thanks for your input, Mattk, Newchodge.

    The article that I was reading says:

    Note that national insurance is non-aggregative. That means you do not add up different sources. If you earn £240 a week in a part-time job, you will pay national insurance. If you earn £120 a week in each of two part-time jobs, you pay no national insurance as they are each below the earnings threshold.

    It's not the same situation with my partner but - for the purposes of discussion, if her company paid her £120 a week then, according to the above, no Employee's NI would be payable.

    Thus my question, "if it paid her £8500 in a single tax year would it have to?"

    She became a director of the company when it was formed in May after she left her old job. She is a sole employee.
     
    Posted: Jan 20, 2020 By: NortonBishop Member since: Sep 26, 2019
    #4
  5. Scalloway

    Scalloway UKBF Legend Free Member

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    Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £8,632.

    Contributions are worked out from their annual earnings rather than from what they earn in each pay period.

    https://www.gov.uk/employee-directors
     
    Posted: Jan 20, 2020 By: Scalloway Member since: Jun 6, 2010
    #5
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Depending on the date she becam a director she can receive 11/12 or 10/12 of £8628 without paying NI. If she pays herself more than both employer's and employee's NI will become payable. she ahs to set the payroll up properly and pay herself before 5 April 2020
     
    Posted: Jan 20, 2020 By: Newchodge Member since: Nov 8, 2012
    #6
  7. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    The point about it being 10/12ths of the £8628 is very valuable thanks.

    Thank you for your input, Scalloway, Cyndy.

    The P45 that was meant to be sent to my partner never arrived and the only detail in the "To Whom it may concern letter" the old employer has since provided says that her leaving date was 31/3/19 and the Pilon payment she received in 2019/2020 "was taxed on 0T/1". It shows tax of £4627 on a Gross pay of £14727.

    Do you maybe know what 0T/1 means, please?
     
    Posted: Jan 20, 2020 By: NortonBishop Member since: Sep 26, 2019
    #7
  8. Newchodge

    Newchodge UKBF Big Shot Free Member

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    It means it is taxed on the single payment, not on the cumulative amount.

    Everyone now has a personal tax account on HMRC. Register for and log on to that and it will show ehat the employer declared as income/tax.
     
    Posted: Jan 20, 2020 By: Newchodge Member since: Nov 8, 2012
    #8
  9. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    Thanks again for your help on this.

    It's now my partner's time to be paid from her company. She became a director in May at the time the company was formed - does that mean that she can receive 11/12ths or is it 10/12ths of £8628 without paying NI? I can't find this information online at all.
     
    Posted: Mar 13, 2020 By: NortonBishop Member since: Sep 26, 2019
    #9
  10. Newchodge

    Newchodge UKBF Big Shot Free Member

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    It depends on the actual date. Enter the date she became a director in your payroll software, together with 11/12ths of 8628 and it will show if she has to pay NI. If she does, change the amount to 10/12ths.
     
    Posted: Mar 13, 2020 By: Newchodge Member since: Nov 8, 2012
    #10
  11. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    Thanks very much.

    She doesn't have any payroll software but checking on companies house, I see that she became a director when the company was formed on 26 April 2019. She can wait until 26 March to be paid if that made a difference....
     
    Posted: Mar 13, 2020 By: NortonBishop Member since: Sep 26, 2019
    #11
  12. Newchodge

    Newchodge UKBF Big Shot Free Member

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    She cannot receive salary unless she uses payroll software or a payroll provider :)
     
    Posted: Mar 13, 2020 By: Newchodge Member since: Nov 8, 2012
    #12
  13. NicoJ

    NicoJ UKBF Regular Free Member

    193 32
    Just to add to this, 0T means no personal allowance was applied to the payment so she will have overpaid tax if she had no other income during the year.
     
    Posted: Mar 13, 2020 By: NicoJ Member since: Mar 27, 2017
    #13
  14. Newchodge

    Newchodge UKBF Big Shot Free Member

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    She is planning to pay herself up to the NI maximum.
     
    Posted: Mar 13, 2020 By: Newchodge Member since: Nov 8, 2012
    #14
  15. NicoJ

    NicoJ UKBF Regular Free Member

    193 32
    Yes, I read that - I was addressing the tax situation not NI. They have been taxed on £14k with no personal allowance.
     
    Posted: Mar 13, 2020 By: NicoJ Member since: Mar 27, 2017
    #15
  16. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    Oh, okay, thanks. I could add "Payroll" to my own version of Xero but does it have to communicate directly with HMRC as, if it does, it won't be in her company name...
     
    Posted: Mar 13, 2020 By: NortonBishop Member since: Sep 26, 2019
    #16
  17. NicoJ

    NicoJ UKBF Regular Free Member

    193 32
    No you won't be able to do that, it needs to be in her company name and PAYE reference. Yes, it needs to communicate with HMRC. Has she set herself up as an employer with HMRC?
     
    Posted: Mar 13, 2020 By: NicoJ Member since: Mar 27, 2017
    #17
  18. NortonBishop

    NortonBishop UKBF Newcomer Free Member

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    The company was registered as an employer on February 5th and a letter with codes then received. Nothing else done yet....
     
    Posted: Mar 13, 2020 By: NortonBishop Member since: Sep 26, 2019
    #18
  19. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Assuming they have a P45 for the 14K that will be sorted when they file payroll. If not it will have to be reclaimed after 5 April.
     
    Posted: Mar 13, 2020 By: Newchodge Member since: Nov 8, 2012
    #19
  20. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,671 3,578
    Has her company got PAYE and accounts office references?
     
    Posted: Mar 13, 2020 By: Newchodge Member since: Nov 8, 2012
    #20