First director's salary payment 3 months after ltd company formation

First director's salary payment 3 months after...

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Hi, could anybody clarify for me the following please.

I am a 1 man ltd company in consultancy. The company was registered on 1 May 2015. I started working on 22/06/2015. The company registered for PAYE on 21/06/2015. The activation code came in the begining of July - the letter dated 26/06.2015. The first income received by company was on 09/07/2015. I was busy with organising bank accounts and my work so finally when I have time to sort out the PAYE, I decided to use Payroo RTI and I realised that I will be paying myself way too late according to HMRC as it says:"Your cleared payment must reach our bank account no later than 22nd of the month following the end of the tax month or quarter to which it relates". As my payment will be relating to June, July it seems I am late now. I tried to choose a quarterly payment, but the quarter there is 31-03-15  to  30-06-15 which means that I am late for it as well. Please advise, may I not pay myself at all for the previous months and start paying from July 2015? Or is here any other solution to it?  

Thank you.    

Replies (11)

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By nogammonsinanundoubledgame
02nd Aug 2015 20:21

What ...

... does your accountant advise?

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By King_Maker
02nd Aug 2015 20:54

There is no need to draw a salary/wage/fee merely due to the company receiving income.

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By Matrix
03rd Aug 2015 06:32

You will need to look at the RTI filings in Payroo and determine when the payments should be made.  PAYE on filings made in the quarter July-Sept are payable on 22 October.  You would be best placed to engage an accountant to discuss tax efficient extraction of profits since there may be an optimal salary level which should have been determined in advance.

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By stephenkendrew
03rd Aug 2015 07:28

get an accountant

If you have any PAYE/NI liability then you are almost certainly not paying yourself a wage that is the most tax-efficient for you.

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Replying to anneaccountant:
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By Matrix
03rd Aug 2015 07:55

EA

stephenkendrew wrote:

If you have any PAYE/NI liability then you are almost certainly not paying yourself a wage that is the most tax-efficient for you.

Not strictly true, if my clients are not using the employment allowance for employees then I may advise a salary equal to the personal allowance to use some of the EA, in which case employee's NI is payable.  However the optimal salary depends on the facts as previously advised.

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By JCresswellTax
03rd Aug 2015 09:30

Another one?

These are becoming more frequent than accountants posting questions!

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By 4uvak
03rd Aug 2015 20:32

Thanks Matrix. I still have to pay myself June salary which will be out of July-September quarterly period. I am trying to understand - if I pay myself now for June, will I be charged by HMRC for late RTI filing? As to the most tax efficient way of payment, I am over £7,956 since April 2015 as I was employed before I started Limited company. So I will go for £10,600 plus dividends. I am not sure if I will be able to offset employer's national insurance against £2000 tax break as I understand there is a limit on income during the year to do that. And also could you clarify if it will be OK to pay myself £1 per hour as due to my calculations to stay withing £10,600 I only can pay myself £170 per month and my working hours are about 170 per month. Thank you.   

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Scalloway Castle
By scalloway
03rd Aug 2015 20:26

Pay yourself now and everything will be up to date going forward.

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Replying to Rammstein1:
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By 4uvak
03rd Aug 2015 20:56

Thanks Scalloway. Just to confirm - if I pay myself for June now and send RTI on the same day, should everything be fine? Or should I start paying myself starting from July? In this case what will happen to the June, as I was a director since 22 June? And also, may I pay myself as a director £1 per hour as I only can pay myself £170 per month before I reach £10,600 and I am doing about 170 hours per month? Thank you.

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Scalloway Castle
By scalloway
03rd Aug 2015 22:01

Pay up to date

Pay yourself up to date. HMRC are only concerned with the latest submission. As to what you pay yourself as a director you can pay whatever you and your accountant think appropriate.

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By Matrix
03rd Aug 2015 22:15

You have thanked me but you have not read and taken the advice.  You really seem out of your depth.  There will be no employer's NI if you are only paying a few thousand in salary this year and next year there is no EA for sole Director employers.  I don't really follow the hourly rate query.  You generally do not need an employment contract or to pay the minimum wage (unless claiming working tax credits). The company can pay whatever salary you decide but it may be sub-optimal.

You will need an accountant to file your accounts and the costs will be higher if they have to sort out your mess so DIY is a false economy.

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