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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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.
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.
EA
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.
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.
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.