Director payroll - prorated NI?

Director payroll - prorated NI?

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New one-director Ltd Co. client.
 

Started trading in 2013 and the company's second financial year ends on 31 January 2015.

 

The company only has profits of about £10k.

 

The director has not used up their personal allowance as they did not have a payroll scheme in place until November 2014. ( in hindsight, he really should not have set up the company given that low profit level)

Putting the start date as 1st December in the payroll software gives a significant NI figure payable in January, which seems to be applying the logic of a director being appointed during the year (partial year rules)
 

Is it correct for director NI thresholds for salary to be prorated since the date the payroll scheme was registered in November (even though director's appointment was in 2013) ? 

Or do you think that the director start date can be earlier than the payroll scheme start? 

Thanks

Replies (5)

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By StartUpAcc
27th Jan 2015 15:57

Director's salary experts please.....

I assume HMRC will say it should be pro-rated but I'm interested if anyone else has come across this?

As he decided to form a ltd company rather than being self employed, he is left with a larger NI bill if he takes more salary (or CT bill if he doesn't take salary) rather than the circa £325 (on £10k) if he was self employed.

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By Wanderer
27th Jan 2015 16:15

1 December?

Why put the start date as 1 December?

I'd put the start date as when he was first appointed as a director.

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By Marion Hayes
27th Jan 2015 16:38

Date of appointment

is the start date you need to enter.

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Replying to CTAQ:
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By StartUpAcc
27th Jan 2015 16:56

Thanks so much both of you for replying.

 

So just to clarify again, you would put date of appointment as in 2013 when the company was formed which is prior to the payroll scheme being in place?

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By Marion Hayes
27th Jan 2015 17:00

Yes

as that is when he began to be a Director

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