Frequency of Director Salary

Frequency of Director Salary

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I have a small limited company I use for infrequent private work in addition to my main salaried employment.
I am the director and sole employee and pay myself by the low salary-dividend method.
Turnover is between £40000-£50000 a year.
Question is regarding the salary portion (ie not divedend) which is about £10000 gross/year.
Is it fine to pay the salary and do the relevant PAYE once a year before end of year returns rather than drip it in monthly over the year or does HMRC not allow this.
I am in no rush for the cash so it sits in my business account until needed and I 'pay' myself.
Thanks

Replies (6)

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Euan's picture
By Euan MacLennan
24th Dec 2015 11:11

Annual scheme

You can ask HMRC to set your PAYE scheme as an Annual Scheme and specify the one month of the year in which you will pay a salary.  That means that you are only required to file one FPS under RTI for the specified month and do not have to file nil FPS/EPSs for the other 11 months.

I assume that you would specify March as your payment month, but beware that if you draw money out of the company during the course of the year, you could have an overdrawn director's loan account, with the ensuing tax consequences, before the account is restored to credit by the net salary being credited in March.

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By law man
24th Dec 2015 11:11

Single annual payment of salary

I can see no objection to a payment annually rather than monthly.

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By cheekychappy
24th Dec 2015 11:13

If your personal allowance is already consumed by your employment, there is no benefit to pay yourself a salary.

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Replying to lionofludesch:
Euan's picture
By Euan MacLennan
24th Dec 2015 11:18

Really?

cheekychappy wrote:

If your personal allowance is already consumed by your employment, there is no benefit to pay yourself a salary.

So, you would advocate taking (say) £40,000 (£50,000 less 20% CT) as dividends to be taxed at 32.5% from April 2016?

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By cheekychappy
24th Dec 2015 11:22

I was using the current tax year.

It will depend on the existing earnings in their employment. Something we don't know.

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the sea otter
By memyself-eye
26th Dec 2015 12:02

Beg to differ


On the need NOT to submit nil FPS/EPS reports. I will pay myself as a director next March under the annual scheme. Reported such on an FPS in late April 2015. Received a demand in November for NI contributions (it didn't specify whether employer or employee) for the intervening months. HMRC told me that to correct this erroneous penalty -as my salary is below the thresholds - I still have to submit nil EPS returns for April 2015 - March 2016 (ie 11 in number) which kind of defeats the object of an annual submission... 

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