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Confused about week 1 month 1 basis on payroll

Two directors just newly incorporated 1 Nov.  So I have added them onto payroll (sage software). Do I tick week1 month 1? I'm putting through salary of £3k but I didnt expect any NIC.  Obviously confused.  Should I tick the box or not?

Thanks!

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29th Nov 2012 18:09

P45 or P60?

Use one of these.

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By imbs
29th Nov 2012 18:19

Don't have one
They were self employed.
Any ideas on what to do about that box?

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29th Nov 2012 18:25

P60

Use P60.

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By tom123
29th Nov 2012 19:49

Peter, did you mean P46

Get the directors to complete and sign form P46.

They will probably sign statement B (only or main job, but have worked since April) in which case you would use month 1 basis.

 

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By Old Greying Accountant
29th Nov 2012 20:51

Surely ...

... they complete a P46, sounds like Box B to tick

http://www.hmrc.gov.uk/paye/employees/start-leave/new-employee-nop45.htm 

http://www.hmrc.gov.uk/forms/p46.pdf 

Under directors rules, the NIC limits will be pro-rated from 01/11/12 so they can only earn around £3200, so with the £3000 you suggest should be OK. You need to check the Directors NI box (which I assume SAGE has), otherwise you may get NI charged depending how you account for the salary. If you are putting £3000 on now there will be NI, I assume you will be paying £600pm?

EDIT - damn you Tom, I wrote more so you posted first!

 

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By tom123
29th Nov 2012 20:39

OGA yours was a better answer

But yours was a better answer - I need to learn how to do the links..

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By Old Greying Accountant
29th Nov 2012 20:52

I just ...

tom123 wrote:

But yours was a better answer - I need to learn how to do the links..

... highlight the URL in my brower, right click and copy and paste it in.

You can do clever ones where a word turns blue and has the link embedded, but in a Bob Harper thread they can be missed too easily that way!

Just high-light the word(s) and click on the little blue world with a chain link under it when in the comment box (in the middle of the row of icons) then paste in the url.

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By imbs
29th Nov 2012 20:56

Thanks Tom and Old Grey
Thank u both, let's call it a tie!

But please be patient with me- unfortunately I leap frogged the payroll dept in training and all work since then so now that I've started my own practice I now have to fill all the gaps - no matter how basic!

But back to the payroll issue. I phoned HMRC ers helpline and they said that when a self employed person incorporates and becomes an employee, they actually tick box A i.e. Where the P46 is concerned, self employment is not considered a job per the form. In those boxes, references to jobs refers only to paid employment as an employee.
How can something so basic be so complicated?!
Sage does have the director option. I assume that I choose the director method rather than the director table method?

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By imbs
29th Nov 2012 21:03

Stay with me here please...
I was going to put £3k through in one lump then raise dividend next month then hopefully draw on goodwill the next couple in order to get us to April and then put through the LEL thereafter. How does that sound?

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By Old Greying Accountant
29th Nov 2012 22:38

If you put it through as a lump sum ...

... I think you will find you will pay NI, try it and see!

As to Box A or B - doesn't really matter, either way there is sufficient PA to cover Nov - Mar (£8105 x 5/12 = £3377) but if you're doing a lump sum you would want cummulative, or you will pay tax now and then reclaim each month through until month 12.

As to the plan, depends on the income, you must have reserves to draw a dividend.

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30th Nov 2012 01:56

P46

Yes, I meant P46. I've got too much on right now!

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30th Nov 2012 04:09

A

"This is my first job since last 6 April and

I have not been receiving taxable Jobseeker'sAllowance, Employment and Support Allowanceor taxable Incapacity Benefit or a state oroccupational pension." If this is the case then mark A.

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06th Dec 2012 14:47

Directors' NI

There was a relaxation (in the middle past - 2003?) allowing use of the table method for directors 'in year'. Most software will reconcile directors using the table method at 5th April to ensure the pro rata...as long as all the correct boxes are ticked!

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