Payroll manually to HMRC?

[boff]

I've set up a ltd company to do some plumbing work. I do very little work, this is more like a hobby than to earn anything.
However, in order to set up a ltd company, there needs to be a minimum of 1 employee.
So now I need to submit payroll to HMRC.


I'm not paying myself every month. There's just not enough money for that. In fact, I was planning to simply keep any money left at the end of the financial year and report that as my salary.
I've now got a notice from HMRC for late filing of payroll info, yet I haven't paid myself.


What's the cheapest way to send payroll info in my circumstances, since I want to pay myself once a year?
Payroll provider, payroll software and an accountant all cost and all seem overkill for 1 payroll payment.
All I think I need to do is tell HMRC I will pay myself £X on y date (once per FY) and here's your tax.

 

[DontAsk]

However, in order to set up a ltd company, there needs to be a minimum of 1 employee.

Says who?

 

[WaveJumper]

A lot of effort for a hobby and why do people set up a ltd company before getting any advice

 

[boff]

Says who?

When setting up the company, I didn't see any options not to.

 

[WaveJumper]

When setting up the company, I didn't see any options not to.

Set up a limited company: step by step - GOV.UK

How to set up a limited company, appoint directors and shareholders or guarantors, and register for tax.

www.gov.uk

 

[NicoJ]

I've set up a ltd company to do some plumbing work. I do very little work, this is more like a hobby than to earn anything.
However, in order to set up a ltd company, there needs to be a minimum of 1 employee.
So now I need to submit payroll to HMRC.


I'm not paying myself every month. There's just not enough money for that. In fact, I was planning to simply keep any money left at the end of the financial year and report that as my salary.
I've now got a notice from HMRC for late filing of payroll info, yet I haven't paid myself.


What's the cheapest way to send payroll info in my circumstances, since I want to pay myself once a year?
Payroll provider, payroll software and an accountant all cost and all seem overkill for 1 payroll payment.
All I think I need to do is tell HMRC I will pay myself £X on y date (once per FY) and here's your tax.

You could close the scheme down. If you have no other income you can put through a nominal salary without a scheme. If you do have other income you can take the profit as dividends rather than salary.

Another option might be to get rid of the company and trade as a sole trader.

 

[WaveJumper]

You could close the scheme down. If you have no other income you can put through a nominal salary without a scheme. If you do have other income you can take the profit as dividends rather than salary.

Another option might be to get rid of the company and trade as a sole trader.

Being a plumber it might not be long before the dreaded VAT threshold is reached ?

 

[DontAsk]

When setting up the company, I didn't see any options not to.

Seeing it up where?

 

[Daybooks]

I've set up a ltd company to do some plumbing work. I do very little work, this is more like a hobby than to earn anything.
However, in order to set up a ltd company, there needs to be a minimum of 1 employee.
So now I need to submit payroll to HMRC.


I'm not paying myself every month. There's just not enough money for that. In fact, I was planning to simply keep any money left at the end of the financial year and report that as my salary.
I've now got a notice from HMRC for late filing of payroll info, yet I haven't paid myself.


What's the cheapest way to send payroll info in my circumstances, since I want to pay myself once a year?
Payroll provider, payroll software and an accountant all cost and all seem overkill for 1 payroll payment.
All I think I need to do is tell HMRC I will pay myself £X on y date (once per FY) and here's your tax.

You are probably confusing ”requiring a minimum of one director” as “… one employee”. If HMRC have sent you a notice for late filing of a payroll “Real Time Information” then you would have registered for a PAYE scheme.

Running a company is not a hobby and has certain obligations; something which you may only just be realising - the hard way. Your cheapest way to file the information is to use HMRC Basic PAYE tool but that would be a false economy!

You could try and tell HMRC what you think you’ll pay yourself and pay them some tax - but that conversation will not end well for you.

Please take some professional advice before getting further into problems; which trust me is coming your way.

 

[OMGVape]

Please take some professional advice before getting further into problems; which trust me is coming your way.

Care to explain why?

 

[boff]

I didn't confuse a minimum of 1 director with employee. I really didn't want to have any employees but at that time when setting up the ltd company, I didn't see any other options. A bit of googling doesn't provide any relevant results except for this one:

Can a limited company have no employees?

Find out if a limited company can have no employees. We also look at the employment status of directors, and how to register as an employer.

www.1stformations.co.uk

Even then, the article seems to use "employee" in the sense of additional people working for the company.

But I'd be happy to be wrong. In this case it would be to my advantage then, as I could remove that single employee (myself) and run my company without any and collect any profit as dividend. Is that correct?

I was a sole trader before but wanted the protection that a ltd company provides.
I'm aware of the obligations of a company, this is not the first one I set up. I did want to avoid that payroll issue though as I knew it would be a headache.

 

[Daybooks]

Care to explain why?

HMRC will want a corporation tax return filed; Companies House will want an annual Confirmation Statement filed as well as annual accounts and will either have the company struck off and/or impose financial penalties if the latter is not done and the company wants to continue. Should the company grow then will VAT registration take place at the right time? Will the director start taking out funds and then argue they were either dividends or unaccounted for salaries?

If trade is low will consideration be given to running as a sole trader and/or utilising the annual trading allowance?

Alternative you could just write to Companies House and explain it’s only a hobby.

I leave my electrical work to my electrician for a reason.

 

[Daybooks]

A PAYE scheme is required when you have paid employees meeting certain pay criteria.

Company law and the appropriate tax legislation determine the rules and not website articles. A limited company does offer protection. A mix of minimum salary and dividends is often optimal but planning in advance would be your best friend.

 

[NicoJ]

I didn't confuse a minimum of 1 director with employee. I really didn't want to have any employees but at that time when setting up the ltd company, I didn't see any other options. A bit of googling doesn't provide any relevant results except for this one:

Can a limited company have no employees?

Find out if a limited company can have no employees. We also look at the employment status of directors, and how to register as an employer.

www.1stformations.co.uk

Even then, the article seems to use "employee" in the sense of additional people working for the company.

But I'd be happy to be wrong. In this case it would be to my advantage then, as I could remove that single employee (myself) and run my company without any and collect any profit as dividend. Is that correct?

I was a sole trader before but wanted the protection that a ltd company provides.
I'm aware of the obligations of a company, this is not the first one I set up. I did want to avoid that payroll issue though as I knew it would be a headache.

You are classed as an employee when you are a director. This doesn't mean that you have to operate a PAYE scheme. Google the criteria for that, ascertain whether it applies and then you can either close the scheme or start researching how to submit RTIs. There are plenty of payroll providers who will do it for you if thats an option.

 

[Newchodge]

A limited company does not have to have any employees but must have a director. If the director receives payment (rather than or in addition to dividends) the payment must go through payroll if certain criteria are met.

You cannot do PAYE returns manually, they must be done online.

 

[boff]

You cannot do PAYE returns manually, they must be done online.

When I say manually, I mean not using any software. Is there this option?

 

[boff]

You are classed as an employee when you are a director. This doesn't mean that you have to operate a PAYE scheme. Google the criteria for that, ascertain whether it applies and then you can either close the scheme or start researching how to submit RTIs. There are plenty of payroll providers who will do it for you if thats an option.

So every ltd company requires at least one employee but doesn't necessarily need to operate a PAYE scheme? That must have been my misunderstanding.

 

[Newchodge]

So every ltd company requires at least one employee but doesn't necessarily need to operate a PAYE scheme? That must have been my misunderstanding.

No. Every ltd company must have a director. The director is not, necessarily, an employee.

When I say manually, I mean not using any software. Is there this option?

No. You can use Basic PAYE Tools, which is free and very basic.

 

[boff]

You can use Basic PAYE Tools, which is free and very basic.

Where can I find these?

 

[boff]

I think there is my answer:

Download HMRC's Basic PAYE Tools

Download HMRC's free payroll software Basic PAYE Tools

www.gov.uk

 

[NicoJ]

So every ltd company requires at least one employee but doesn't necessarily need to operate a PAYE scheme? That must have been my misunderstanding.

A company must have a director. A director is classed as an employee but is not required to have a contract of employment and therefore a sole director doesn't always need to register a PAYE scheme.

As I noted if you are not planning to take a salary, then close the scheme and inform HMRC that it was opened in error.

 

[boff]

A company must have a director. A director is classed as an employee but is not required to have a contract of employment and therefore a sole director doesn't always need to register a PAYE scheme.

As I noted if you are not planning to take a salary, then close the scheme and inform HMRC that it was opened in error.

Yes, I'll be closing that PAYE asap but from what I've seen it has to be done via the PAYE software?

Stop being an employer

Tell HMRC if you stop employing people, cancel your PAYE scheme, report a temporary gap in paying staff

www.gov.uk

The information wasn't very clear to me. It was clearly stipulated throughout that a company requires at least one director. But as you put it, a director is an employee, so a company will always have at least one employee and this is where I must have got confused and gone down this PAYE route.

 

[Newchodge]

a director is an employee

I am afraid that was wrong. A director is not necessarily an employee. IF they are an employee their relationship is governed by a contract of employment. In my own company I am a Director but I am not an employee and I don't receive a salary.

 

[NicoJ]

Yes, I'll be closing that PAYE asap but from what I've seen it has to be done via the PAYE software?

Stop being an employer

Tell HMRC if you stop employing people, cancel your PAYE scheme, report a temporary gap in paying staff

www.gov.uk

The information wasn't very clear to me. It was clearly stipulated throughout that a company requires at least one director. But as you put it, a director is an employee, so a company will always have at least one employee and this is where I must have got confused and gone down this PAYE route.

I would give HMRC a call, explain the situation and ask them to close the scheme. They can do this, but depending on who you speak to they may resist it so be prepared to be persistent.

 

[boff]

Wouldn't it be easier to simply close it down via that PAYE tool rather than try my patience on the phone and my luck with getting the right person at the end? I could even get it done this weekend.

I got a notice for not filing PAYE info in time and a rather large estimated tax bill from PAYE. The irony is that I opened the PAYE too early because I didn't want to leave it till the last moment and now I have to deal with all this despite not having paid myself anything.

 

[DontAsk]

Your cheapest way to file the information is to use HMRC Basic PAYE tool but that would be a false economy!

Why? It will work very well for the OPs situation, where the cost of a payroll service would probabnly outweigh any benefit.

A director is classed as an employee

Repeating something does not make it any more correct. A director is only an employee if they are an employee, i.e. they have an employment contract.

 

[Daybooks]

Why? It will work very well for the OPs situation, where the cost of a payroll service would probabnly outweigh any benefit.

Using the basic tool will not give you access to the experience provided by a payroll provider through payroll software nor will it give access to the experience of an accountant that would have helped avoid all of the problems the OP has been experiencing.

The monetary value you place on these is entirely upto you.