Private LTd company: 2 Directors, PAYE and self-assessment hmrc

[hich]

Hello,

We 2 own a private ltd co, and we are 2 directors of it. no other staff.
The co was dormant since incorporation until Sep 2016.
The accounting period ended last 30 April 2017 for both companies house and HMRC.
1 business bank account with lloyds. Sales into that account. Expenses of that acount.
On the last business day before 30 april, ie 28 April 2017, we paid 1 director from the business bank account to the personal bank account of the director, item titled Salary 2017.
The said director was a:

1. school employee on PAYE between April 2016 to September 2016
2. appointed a director on Sep 2016
3. earned salary on 1 day: 28 April 2017: £2000 or so

We have registered the business online with HMRC for "corporation tax" but not for "PAYE for employers".
There was no profit for the Apr16-Apr17 tax year, so expect to pay no corporation tax, which we'll declare online at HMRC.

The question now is about personal taxes for the director. Should that director register for self-assessment with HMRC and do Apr16-Apr17 tax online?

 

[Scalloway]

The 2016/17 tax year ended on 5 April 2017. Any salary received on 28 April 2017 will go into the 2017/18 tax year.

 

[hich]

indeed.
1. There was a personal bank account credited on 6apr2017 as seen, but with a comment on the transaction sourcing the company and a fast payment dated 5April 2017.
I'll assume it's the credit date in the destination bank account which matters therefore this payment is part of the 17/18 tax year.
2. the 2nd payment was 28Apri17, and this is totally the 17/18 tax year.

Therefore,
1. PAYE was enough for 16/17 tax year, nothing more to do, as their was no other income.
2. the director needs to find a way to declare 17/18 tax. Can she register for self-assessment and can she declare that income through that?

 

[Scalloway]

Directors have 2 methods of paying themselves.

1. PAYE. If total income will be less than £5,876 in the tax year and the company has no other employees then you do not need to register.
2. Dividends. These can only be paid from profits after tax. Currently the first £5,000 is tax free.

For the 2017/18 tax year you do not need to register for self assessment until October 2018.

 

[Newchodge]

I'll assume it's the credit date in the destination bank account which matters therefore this payment is part of the 17/18 tax year.

The date on which the payment was made is what counts. If the individual was paying tax during their employment there may be tax to pay and you should have run payroll on 5 April. There would be NI to pay unless you make sure that the payroll shows she was a director from 16 September 2017.

 

[Dean Logan FCA]

If you have no personal tax liability there is no need for you to register for and complete a Self Assessment.

 

[MyAccountantOnline]

.....
The question now is about personal taxes for the director. Should that director register for self-assessment with HMRC and do Apr16-Apr17 tax online?

Did the director have any untaxed personal income or any tax to pay which wasn't collected via PAYE or at source, or a tax refund due?

 

[UK Contractor Accountant]

If you have no personal tax liability there is no need for you to register for and complete a Self Assessment.

Try explaining that to HMRC!

Their internal guidance states that all Directors receiving pay should complete a SATR.

“According to HMRC, you’ll need to send a tax return if…

• you were a company director – unless it was for a non-profit organisation (eg a charity) and you didn’t get any pay or benefits, like a company car”

 

[MyAccountantOnline]

Try explaining that to HMRC!

Their internal guidance states that all Directors receiving pay should complete a SATR.

“According to HMRC, you’ll need to send a tax return if…

• you were a company director – unless it was for a non-profit organisation (eg a charity) and you didn’t get any pay or benefits, like a company car”

You could always ask them to direct you to the relevant legislation which requires all directors to request and submit a tax return

And then also remind that about Mohammed Salem Kadhem.

 

[UK Contractor Accountant]

You could always ask them to direct you to the relevant legislation which requires all directors to request and submit a tax return

And then also remind that about Mohammed Salem Kadhem.

I have tried but they don't budge !- thats what their 'Manual' says is the reply that keeps coming back.

Also they have listed this mysterious limit of £10K in dividends for non salaried Directors as a requirement for a Tax Return for 2016 SATR'S and previous.

 

[STDFR33]

The problem is, when HMRC are insistent on a return, it is usually much quicker to just file the return than argue with them.