Hi.
I habe a director starting part way through the year.
They had no income for the months before they started as a director but the ni needs to be pro rated.
WI'll they then have an annual adjustment allowing then the full NI for the year?
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No
What do you mean by "allowing then the full NI for the year"? The whole point is that a director who is appointed part way through a tax year has a pro rata annual earnings period, which is obviously less than the full year.
What's the point?
Why charge NI for part of the year if it's going to be adjusted to the full year?
So do the directors lose the NI from the beginning of the year?
Day they only became director in March does that mean they can only earn 1/12 before paying NI?
Wrong way round
You talk as if you think that the directors' annual earnings period for NIC is some sort of entitlement. It isn't - it is a means of calculating the NIC payable by directors.
The annual NIC thresholds are reduced pro rata. If the director starts on 5th March, their threshold will be approximately 1/12th (the apportionment is on a daily basis) of the full annual threshold. If their pay in March exceeds 1/12th of the annual NIC thresholds, they will be liable to pay NI contributions.
If the director wants to pay more
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pa...
I'm sorry I'm getting so confused. (This is the goat time this has happened to me add I only process a handful of payroll)
So an employee can earn 8060 in the year without paying NI but a director who has no earnings for the first 11 months before becoming a director has to pay NI on anything they earn in that final month over 672?
If that's right then ill process it in that way and never question it again but I just can't get my head around why they can't earn as much.
Gibberish
This is the goat time this has happened to me add I only process a handful of payroll
All your base are belong to us.
I just can't get my head around why they can't earn as much.
They can earn as much as they like.
OFHS
I'm sorry I'm getting so confused. So an employee can earn 8060 in the year without paying NI but a director who has no earnings for the first 11 months before becoming a director has to pay NI on anything they earn in that final month over 672?
What don't you understand? What do you think is unfair? A director starting in March is in exactly the same position as an employee starting in March - they would both pay Ee's NIC on earnings over £672 in the month. You cannot compare an employee who has been earning all year with a director who has only been earning for one month. If the director had been a director all year, he could also be paid £8060 in the year without paying Ee's NIC - the only concession for directors is that they do not have to earn it evenly over the year - they could be paid £8,060 in March without paying Ee's NIC, provided that they had been paid nothing in the previous 11 months.
Sorry I didn't check the auto correct on my phone. Should remember not to try to multi task.
This is the first time it has happened to me as I only process a handful of payroll.
Ok so they can earn what they like but their earnings before they pay any NI is reduced.
Relative
Sorry I didn't check the auto correct on my phone. Should remember not to try to multi task. This is the first time it has happened to me as I only process a handful of payroll. Ok so they can earn what they like but their earnings before they pay any NI is reduced.
People who work for one month usually earn less than people who work for a year.