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Directors Salary

If my director pays himself a salary of £589 for Jan, Feb and March by the end of March what are his HMRC reporting obligations?  Will he have to complete P14s, P35s or is there any exemption for really low wages?

Its a start up business.

The shareholder - not a director also wants to take a wage of the same amount.  Can he do this retrospectively like the director?  is there any way to get around the min wage issue?  He also receives dividends rather than wages so is keen to keep the wages small to minimise NIC. 

Thanks

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P35 and P14 is required

There is an exemption for really low wages, but it is below the Lower Earnings Limit of c. £102/week, so doesn't apply to earnings of £589/month.

The shareholder can take low wages, but presumably (I think?) only if they work sufficiently few hours to be above NMW. It may be simpler to make them a director because then NMW does not apply. There is no reason why an employee should not receive their pay on a quarterly (in this case), or even annual basis so far as I am aware. (there may be other implications of making them a director that an accountant or lawyer would be better placed to advise on)

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01st Apr 2012 13:01

Surely ..

 , , ,the answer depends on when the director was appointed - something that hasn't been stated.  The director will be on an annual pay period for NIC, and £589 a month might not take the earnings over that limit depending on the date of appointment.

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Yes, that's so

Cloudcounter wrote:

 , , ,the answer depends on when the director was appointed - something that hasn't been stated.  The director will be on an annual pay period for NIC, and £589 a month might not take the earnings over that limit depending on the date of appointment.

That's true. But the quoted figure of £589 was sufficiently precisely the amount that can be paid per month without paying any NI that it seemed reasonable to assume that the appointment was at the beginning of January.

In fact I see the opposite mistake far more often, accountants and directors believing that they can pay the annual Earning Threshold amount in a company that formed during the year.

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