Paying Spouse/Secretary

[NEF]

My partner works and is currently the company secretary we haven't taken any wages to date as trying to build the company up but..... the company is vat reg and ltd

How do I go about the payroll side of things, can I just pay a monthly wage now or what are the normal steps and requirments ?

Thanks

 

[Newchodge]

If your partner has other employment you need to register with HMRC as an employer and run proper payroll every time you pay anyone wages.

You can do it yourself using something like HMRC Basic Tools (which is, unsurprisingly, basic), you can ask your accountant to do it (check their fees, as they can be quite high on occasion) or you can ask a payroll provider to do it for you.

If you are paying her at least £10,000 pa you will also have to set up a pension scheme for auto-enrolment.

 

[justintime]

You can pay up to £533 a month without having to operate payroll, providing no employees are working elsewhere. If over that figure or working elsewhere you'll need to set up a payroll scheme with HMRC. https://www.gov.uk/paye-for-employers/setting-up-payroll

alternatively you could use an external payroll provider to do it all for you. It would also be worth getting in touch with an accountant to advise you on the most tax optimal way of paying yourself (usually a mix of PAYE and dividends, tailor made to your circumstances.

 

[GLAbusiness]

I use FreeAgent for my bookkeeping. It handles the payroll very simply. No need for a payroll provider for a simple requirement like this

 

[NEF]

Currently my partner works part time and earns 13,000 PA , she is down as my secretary so what would be the simplest way to do this, Could I pay her 12,000 PA without paying pension contributions also what about national insurance is there some sort of allowance ?

 

[TheCyclingProgrammer]

If you are paying her at least £10,000 pa you will also have to set up a pension scheme for auto enrolment.

Doesn't that depend on whether or not there is an employment contract in place? The Pensions Regulator states that company secretaries without employment contracts are not workers and are exempt:

https://www.thepensionsregulator.go.../director-exemptions-from-automatic-enrolment

 

[SteveHa]

Doesn't that depend on whether or not there is an employment contract in place? The Pensions Regulator states that company secretaries without employment contracts are not workers and are exempt:

I'm concerned by the terminology used by the poster. In the OP he refers to his partner being the company secretary, though in post #5 he refers to her being "my secretary", which would be a different thing. I think we need clarification before looking at the exemption.

 

[Mr D]

Currently my partner works part time and earns 13,000 PA , she is down as my secretary so what would be the simplest way to do this, Could I pay her 12,000 PA without paying pension contributions also what about national insurance is there some sort of allowance ?

The decision about whether you would pay pension contributions is not yours.
Its the employee's decision. They can choose to opt out which will save the business some money.
But its not a decision you as the employer can make for the staff.

I believe there is some sort of allowance with employers NI.

 

[gpietersz]

In the OP he refers to his partner being the company secretary, though in post #5 he refers to her being "my secretary"

Most people have no idea what a company secretary is (they think "a secretary who works for a company"), so I would bet she is his secretary so no exemption.

I suggest you get professional advice on how to structure this - you might be better off giving her shares and paying dividends or something like that.

 

[NEF]

Sorry let me clarify this. I'am the MD and she is the company secretary.

 

[TheCyclingProgrammer]

Sorry let me clarify this. I'am the MD and she is the company secretary.

For the avoidance of doubt..."company secretary" as in a register officer of the company with Companies House?

 

[NEF]

For the avoidance of doubt..."company secretary" as in a register officer of the company with Companies House?

Yes registered via companies house as secretary.

So what would be the best method to pay as she is already part time employed and here tax free allowance has already been utilised.

Also what about national insurance and pensions ?

Basically we just want to pay her a wage from the company the easiest and simplest way possible

 

[Mr D]

Yes registered via companies house as secretary.

So what would be the best method to pay as she is already part time employed and here tax free allowance has already been utilised.

Also what about national insurance and pensions ?

Basically we just want to pay her a wage from the company the easiest and simplest way possible

You could employ her part time (or full time). Would need to pay at least minimum wage per hour (could pay more).
If she is a shareholder in the business then could have her receive dividends - which has its own small tax free amount.

 

[NEF]

But what about national insurance or pension contributions ?

 

[justintime]

Is she a shareholder? If yes you can pay her by paye or dividends or a combination of both. Dividends would be payable to you both based on percentage shareholding split.
eg £10000 dividend. Share split 80/20 you would receive £8000 and your partner £2000 First £2000 of dividends are "tax free" and then you pay a percentage of tax depending on your overall annual income (7.5% at basic rate)

If no then based on a £12k income she would pay £2400 tax approx £450 in nat ins and approx £300 pension. The company would also contribute approx £175 pension.

 

[NEF]

So even though she has another job regardless she has to pay pension again and the company has to pay pension ?

Is there any guides to all this online as its as clear as mud..

 

[Mr D]

So even though she has another job regardless she has to pay pension again and the company has to pay pension ?

Is there any guides to all this online as its as clear as mud..

Her decision. She does not have to do any pension at all. But not your decision as employer.

Quite a few websites about the pension scheme. If she chooses to use it then she pays part, employer pays part and government pay the rest.

In theory it's trying to solve a problem with a solution that will take decades to show an impact while not costing too much yet.

 

[Newchodge]

Is she a director?
Is she a shareholder?
Is anyone else paid above the NI threshold of £8.362 per year?
Is anyone else paid above £10,000 per year.
Is she going to be an employee or just paid for directors' duties?

There are probably some more questions, which is why you should talk iot through with a professional.

 

[NEF]

No she is not a director
No she is not a shareholder
No one is paid from the company at all currently
She is going to be a secretary and already has another part time job earning above £12k .

 

[Newchodge]

No she is not a director
No she is not a shareholder
No one is paid from the company at all currently
She is going to be a secretary and already has another part time job earning above £12k .

Then the only way to pay her is through payroll.

There will be no employer's NI to pay as the company will be entitled to the NI allowance.

If she is paid more than £719 per month by this company she will pay employee NI of 12% on everything over that rate.

This is only accurate while your answers to the questions I posted remain true.

If she is paid more than £833.33 per month the company will have to set up a pension scheme for her and automatically enrol her. She will pay 5% of her earnings and the company will pay 3%. She can opt out of the pension at any time.

Whatever she is paid she will pay 20% income tax on all of it.

 

[UKSBD]

She is going to be a secretary and already has another part time job earning above £12k .

A secretary or "the company secretary"?

 

[Newchodge]

A small ltd company does not have to have a company secretary any longer. See here. https://www.iod.com/news/news/articles/The-role-of-the-company-secretary

 

[UKSBD]

Yes, but it doesn't mean they can't

 

[Mr D]

No she is not a director
No she is not a shareholder
No one is paid from the company at all currently
She is going to be a secretary and already has another part time job earning above £12k .

A secretary and company secretary?
Then when you pay her you pay at least minimum wage. Tax wise she'd be paying whatever rate applies. And of course as an employee gets holiday, sick pay etc.

 

[UKSBD]

Can a person be paid for both roles?
ie.
Be paid for there role as a Company Secretary and also be paid for being employed as a secretary?

If so can she be paid £8k for each and still avoid paying NI?
(are the same NI thresholds in place for payments as Company Secretaries?)

Which leads to the question can a Director be paid for a role as a Directory, paid for a role as a Company secretary (assuming they are one) and be paid as an employee?

 

[Newchodge]

Can a person be paid for both roles?
ie.
Be paid for there role as a Company Secretary and also be paid for being employed as a secretary?

If so can she be paid £8k for each and still avoid paying NI?
(are the same NI thresholds in place for payments as Company Secretaries?)

Which leads to the question can a Director be paid for a role as a Directory, paid for a role as a Company secretary (assuming they are one) and be paid as an employee?

They can be paid for both or all 3 roles but the total earnings will count towards the NI threshold.

 

[UKSBD]

thanks, thought it sounded too good to be true

 

[NEF]

Then the only way to pay her is through payroll.

There will be no employer's NI to pay as the company will be entitled to the NI allowance.

If she is paid more than £719 per month by this company she will pay employee NI of 12% on everything over that rate.

This is only accurate while your answers to the questions I posted remain true.

If she is paid more than £833.33 per month the company will have to set up a pension scheme for her and automatically enrol her. She will pay 5% of her earnings and the company will pay 3%. She can opt out of the pension at any time.

Whatever she is paid she will pay 20% income tax on all of it.

This is the most helpful post on the thread half the replies haven't read my comments.. ha
Thanks

Once again for anyone.. Company secretary.

 

[Mr D]

This is the most helpful post on the thread half the replies haven't read my comments.. ha
Thanks

Once again for anyone.. Company secretary.

Doesn't help when you use both secretary and company secretary terms
One is often a full time or part time position and paid, the other can be an hour or less a year and often unpaid.

 

[TheCyclingProgrammer]

I repeat...if she is the registered company secretary and does not have a contract of employment then she may be exempt from pensions auto-enrolment. Read the link I posted before.

 

[Newchodge]

I repeat...if she is the registered company secretary and does not have a contract of employment then she may be exempt from pensions auto-enrolment. Read the link I posted before.

She is not a director.

 

[UK Contractor Accountant]

From Pension Regulator Site

Other office-holders
The special rules for directors do not apply to other office-holders, such as trustees or company secretaries

These office-holders will be classed as workers and subject to the automatic enrolment duties if they have an employment contract with the organisation.

If they have no employment contract and only perform the duties of their office, they are not a worker and are exempt.

Where an office holder does have a contract of employment, it may not cover all of the work that they do for the company.

For example, a company secretary's contract might cover additional administrative services that they provide to the company, but not their official duties as company secretary. In this situation, the office-holder is classed as a worker, but only their income under the employment contract is counted for automatic enrolment purposes.

 

[TheCyclingProgrammer]

She is not a director.

I'm well aware. If you read the link I provided you will see that company officers including company secretaries may be exempt in certain circumstances.

 

[Newchodge]

I'm well aware. If you read the link I provided you will see that company officers including company secretaries may be exempt in certain circumstances.

But here she is the company secretary AND employed as the MD's secretary.

 

[TheCyclingProgrammer]

But here she is the company secretary AND employed as the MD's secretary.

Do they have an employment contract? Would the salary be for their role as a company secretary or for additional duties?

 

[Newchodge]

Do they have an employment contract? Would the salary be for their role as a company secretary or for additional duties?

Read the OP's description. She is the company secretary. She is neither a shareholder nor a director. She is to be employed as the MD's secretary.

Do you want to explain what will happen to the employers' NI allowance if she is only being paid as a company secretary?

 

[TheCyclingProgrammer]

Read the OP's description. She is the company secretary. She is neither a shareholder nor a director. She is to be employed as the MD's secretary

OP said the OP that she is the Company Secretary and he wants to pay her accordingly. He doesn't have to pay her for her additional duties. She can simply receive a fee for her role as company secretary.

He doesn't need to worry about the employer's NI allowance if she is paid a fee below the employer NI threshold.

If she is to have an employment contract and be paid for a role beyond that of Company Secretary then yes, she would be considered a worker for the purposes of auto-enrolment. I've never said otherwise.

 

[Newchodge]

OP said the OP that she is the Company Secretary and he wants to pay her accordingly. He doesn't have to pay her for her additional duties. She can simply receive a fee for her role as company secretary.

He doesn't need to worry about the employer's NI allowance if she is paid a fee below the employer NI threshold.

If she is to have an employment contract and be paid for a role beyond that of Company Secretary then yes, she would be considered a worker for the purposes of auto-enrolment. I've never said otherwise.

The OP said

No she is not a director
No she is not a shareholder
No one is paid from the company at all currently
She is going to be a secretary and already has another part time job earning above £12k .

 

[justintime]

@TheCyclingProgrammer The OP has also indicated he will be paying her 12k a year.

@ NEF Apology as I thought you were asking about the pension, not querying whether you have to pay it or not. Cyndy has clarified she would have to be put in a pension scheme, but can opt out straight away if she wants. The company can't influence that decision though.

For further info on the workplace pension scheme the Pension Regulator site is a good resource

https://www.thepensionsregulator.gov.uk/en/employers

 

[NEF]

@TheCyclingProgrammer The OP has also indicated he will be paying her 12k a year.

@ NEF Apology as I thought you were asking about the pension, not querying whether you have to pay it or not. Cyndy has clarified she would have to be put in a pension scheme, but can opt out straight away if she wants. The company can't influence that decision though.

For further info on the workplace pension scheme the Pension Regulator site is a good resource

https://www.thepensionsregulator.gov.uk/en/employers

I never stated I would be paying her 12k a year. I said she already earns over £12k a year in here current job.

So basically I can pay her £700 a month without worrying about pension contributions or national insurance . What requirements would I need also, would I need some sort of payroll setup ?