Good morning all
Apologies if this is very basic, perhaps I'm just having a bad day!
I have a LTD company client, for whom I use moneysoft. They started up during the year so the PAYE scheme started for July payroll. I submitted month 12 salary, then realised that, only £5771 had been put through the payroll and as he has no other income, could have upped this salary to nearer the £7696 mark. I have reopened the period and put the uplift in.
However, although I have the box ticked within "employees" as using the alternative scheme for NI, the system still calculates NI for both employee and employer.
Is that correct? I thought that by ticking that box the system allowed for an uplift, or has this something to do with the PAYE scheme only being operational from July?
Sorry guys if this is basic, I never find payroll easy for some reason.
Any pointers most welcome.
Replies (6)
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Untick the box
You do not want the "alternative scheme", you want the standard scheme for directors (ie cumulative NI).
So untick the box and make sure MS has him recorded as a director and the NI should disappear.
NI due
I've had this recently. As the company started in July, you will not get 12 months worth of NIC, only a proportion.
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To expand on Rammstein's post, the director will get a pro-rated allowance based on the date he took office. So pay attention to the start date and exactly when the directorship commenced, not when the payroll commenced which is probably some months later.
Annual Adjustment
Just to expand on taxhound's point, month 12 would include an annual adjustment and will give you the same answer whether you go for the standard or alternative method of calculating NIC. Agree with rammstein - your problem is that he's not been a director throughout the year and £5771 is probably just about right.