I have a client who takes no salary from his own company but receives salary elswhere outside his company. We have thus not applied for a PAYE number for his company.. This year he has a loan from his own company and hence has to submit a P11d... It is not likely that he will have a similar situation in 2016
What do we do for the tax office reference number on his form as well as the payment of the Class 1A NIC, ?? Do we have to apply for a new PAYE reference which then begs the question , do we then have to file monthly NIL FPS or is there a better way of doing it please
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A better way
Calculate the interest due on the loan at the official rate of 3.25% p.a. and get the director to pay it to the company. There will then be no benefit to report on a form P11D.
If you need a P11D
If you need to submit a P11D, you need a PAYE reference.
They're not just for wages.
You can apply for an annual PAYE scheme if you want. Then you only have to file once a year. Personally, I'm not convinced they're worth the bother but you may disagree.
@ Matrix
*Possibly* not too late, depending on how pedantic you feel, or more to the point how pedantic is the HMRC PAYE auditor if you get unlucky.
The interest has to be paid "for" the tax year, but does not need to be paid "in" the tax year. That said, the interest has to be "paid", and debiting the interest to an existing overdrawn loan account can create an argument.
And strictly it has to be paid under an "obligation" that existed at the time that it accrued. So, deciding only now to pay interest could be problematic, in the same way that a post year end decision to vote a director's bonus and then rely on the 9 month payment window could be problematic.
For Class 1A NIC purposes you could have a problem if the interest is not paid by 06 July.
With kind regards,
Clint Westwood
Minor correction to Clint's advice
The relevant payment date is 19th July. (Or possibly 22nd if paying electronically but I'm not sure if that applies for the interest issue - I'd err on the side of caution and advise payment of interest to be made by the 19th in all cases.)
Misunderstanding
I agree with Clint, I'm afraid. The 19th July date is when the NI should be paid over to HMRC, not when the interest should be paid to the company.
So you disagree with HMRC, lion ...
Even if the director was required to pay interest for the period during which the loan account was overdrawn, it can only be taken into account for the purpose of reducing or removing any Class 1A NIC liability, if the interest was actually paid by the date when the Class 1A NICs were due to be paid to HMRC
My emphasis
And that same guidance confirms that if Class 1A is being paid electronically then one has until 22 July to pay the interest. Which begs a rather curious question - what happens if the loan is the only benefit for the year and an appropriate payment of interest is made on 21 July. Is that in time? Obviously the company would claim that it had intended to make any payment electronically but an electronic payment would be required only if a liability arises, which would arise only if the paper payment deadline of 19 July had been missed - ad so on, and so on ...