I'd like to run an annual payrun in Month 12 totalling £8,060 for a one director company however, when I try to load up this payment into my payroll software, it triggers both an employers NI liability of £666 and an employee NI liability of £527. I tried this also using the HMRC Basic PAYE tool and it's the same answer. Does anyone know what I would have to do in order to run an annual payroll in Month 12 each year as technically there shouldn't be any NI liability due on this payment.
Thanks in advance.
Polly M
Replies (3)
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In order for there not to be a National Insurance liability, your payroll software needs to show that the individual concerned is a director and has been so for the whole of the tax year. If the person was appointed later than 6 April 2016, the earnings threshold will be reduced accordingly.
As far as I'm aware, this won't work for NI. The employee needs to be flagged as a director and, as stated above, must have been a director for the whole year. You can't claim it back through SA - how would you deal with the employer's share ??
Loads of threads on annual payments for directors - I keep saying it but just pay them monthly and avoid all the pitfalls!!!!