Directors salary

Directors salary

Didn't find your answer?

Sole director company client was incorporated at the beginning of April 2015. Initially directors monthly salary was £500pm which was credited to the DLA. No RTI submissions were made as below the LEL. However from October 2015 the director now wishes his salary to increase to £1,000pm and therefore a formal PAYE scheme has been set up. The directors official employment start date was on incorporation 2/4/15 so when you enter this is the payroll software it will not allow the October RTI submission as there are outstanding submissions for April-September. However, submissions were not actually required for the earlier months. If we now file RTI submissions for April-September will there be fines?

Thanks

Replies (11)

Please login or register to join the discussion.

Euan's picture
By Euan MacLennan
30th Oct 2015 13:28

Oh, dear!

Since when was £500pm less than £486pm, the NI LEL in 2015/16?  The company should have been registered for PAYE from April and RTI returns should have been submitted every month.

Having got it wrong, I would now enter the director as having started on 1st October and pay him £4,000 (6 @ £500 + £1,000) in October.  Provided you leave him on the directors annual earnings period for NI and he is on a cumulative PAYE code, it will make no difference to his net pay.

Thanks (0)
Replying to Paul Crowley:
avatar
By Wanderer
31st Oct 2015 14:43

Interesting point

Euan MacLennan wrote:
Since when was £500pm less than £486pm, the NI LEL in 2015/16?  The company should have been registered for PAYE from April and RTI returns should have been submitted every month.

Having got it wrong, I would now enter the director as having started on 1st October and pay him £4,000 (6 @ £500 + £1,000) in October.  Provided you leave him on the directors annual earnings period for NI and he is on a cumulative PAYE code, it will make no difference to his net pay.

lionofludesch wrote:
At £500 a month, he should have been submitting RTI returns.  Even though no deductions were due.

Have you entered the start date of the scheme into the software ?  Which software are you using ?

A point that I've not considered before. Obviously we all know that a director has an annual earnings period. The CA44 NIC manual says:-  11 Lower Earnings Limit (LEL) If the director has: • an annual earnings period, do not record the earnings details for NICs purposes until the director’s total earnings for the tax year reach or exceed the annual LEL  Bearing this in mind, in the situation as originally described by the OP was he actually late??

Thanks (1)
Replying to Anonymous.:
RLI
By lionofludesch
31st Oct 2015 15:58

Excellent

Wanderer wrote:

A point that I've not considered before. Obviously we all know that a director has an annual earnings period. The CA44 NIC manual says:- 11 Lower Earnings Limit (LEL) If the director has: • an annual earnings period, do not record the earnings details for NICs purposes until the director’s total earnings for the tax year reach or exceed the annual LEL Bearing this in mind, in the situation as originally described by the OP was he actually late??

An excellent point - and, on the basis of that, you're right.

Thanks (0)
RLI
By lionofludesch
30th Oct 2015 13:28

Ooops !

At £500 a month, he should have been submitting RTI returns.  Even though no deductions were due.

Have you entered the start date of the scheme into the software ?  Which software are you using ?

 

Thanks (0)
avatar
By SE
30th Oct 2015 14:07

Typo

Apologies typo. Was £400pm as to DLA director felt involvement in the company on a day to day basis was minimal and now company doing better has increased this.

Thanks

Thanks (0)
RLI
By lionofludesch
30th Oct 2015 14:57

.

Thanks (0)
By tebthereb
30th Oct 2015 21:59

Why would there be fines?

Nothing is late, nothing was incorrect.

I would have thought that if HMRC issued penalties you could get them overturned quite easily.

Although I suppose it is HMRC we are talking about.

Thanks (0)
RLI
By lionofludesch
31st Oct 2015 14:00

Now the salary's dropped to £400 a month, no, you're right.

Thanks (0)
avatar
By Wanderer
31st Oct 2015 14:48

COG904200

also says:-

Employers must register for PAYE and report under RTI where at least one employee

earns at or above the LELhas another job.

Thanks (0)
By tebthereb
01st Nov 2015 12:07

NIC/RTI

So is the conclusion here that, even at £500pm, it would have been correct not to report the monthly payments under RTI until YTD salary exceeded the annual LEL?

I thought CA44 was just in reference to the calculation of NIC. Doesn't the RTI reporting requirement remain?

Thanks (0)
avatar
By Wanderer
01st Nov 2015 18:18

Point I'm making

is it may be that he didn't need to register (& therefore report) under RTI until the earnings went over the Annual LEL for the first time.

Thanks (0)