Payroll / PAYE

[ceeci]

We are two directors who run a small ltd company and are now planning to pay ourselves up to the minimum tax allowance in salary and the rest in dividends (when we can afford to and make enough profit).

Do you recommend getting a payroll software (and if so, which one - ideally one that is free or very cheap) or is it easy enough using the PAYE CD-Rom issued by HMRC?

Any advice greatly appreciated.

Kind Regards,
Cecilie

 

[elaine@cheapaccounting]

CD ROM from HMRC is easy to use and they offer a free course.

 

[Ray Coman]

If you pay yourself below the threshold then there is no need to register for PAYE, however there are drawbacks to paying yourself a salary which is so low, including implications for your entitlement to state benefits. Payroll software would not likely be a worthwhile investment if your salaries were this low.

 

[David Griffiths]

Just to clarify Ray's post.

That refers to salaries below the National Insurance earnings threshold of £97 per week, not the tax threshold of £6,475 (£124.50 per week)

If you pay more than £97 per week you must register for PAYE and make year end returns so that the Revenue are aware of your status for NIC.

 

[Jenni384]

The current optimal salary is £5715 per year which will credit you with full NI contributions for the year. You won't have to pay any tax or NI, you do have to run PAYE and complete year end returns.

 

[philbanks]

Why not get your accountant to do your payroll? Most accountants can do this for you on a per-payslip basis which works out much cheaper for small businesses.

Cheers
Phil

 

[smo]

I'm in a similar situation and was wondering what the approx cost of having an accountant to do the PAYE on a per payslip basis is?

 

[gavcooper]

I have just registered for the free payroll service from Payroo for my company with 3 employees. It was easy to setup and has free HMRC online filing. Looks perfect for your business, just Google 'Payroo' I can't post links yet.

 

[Jaykay]

Be careful about the minimum wage! HMRC went through a phase of prosecuting companies who pay their directors below the minimum although I have not heard of this for a year or so.

 

[elaine@cheapaccounting]

Be careful about the minimum wage! HMRC went through a phase of prosecuting companies who pay their directors below the minimum although I have not heard of this for a year or so.

Really - even though the direct gov site says that this is fine.


http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175114
Company directors

If you are a company director you are an ‘office holder’ in law. You are not entitled to receive the NMW for the work you do as an office holder. If you also have an employment contract or worker’s contract you will be entitled to the NMW for the work you do under that contract. If you are not sure whether this applies to you, you should seek independent legal advice.