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
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  3. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,129 3,411
    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
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  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
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  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
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  7. NortonBishop

    NortonBishop UKBF Newcomer Free Member

    11 0
    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

    13,129 3,411
    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