Director has a company (A) which has traded for the last couple of years, but is now in the process of closing. Director sets up a new company (B) for a new trade, nothing to do with A.
Director ceases to be an employee with A on 30.6.07, and becomes and employee of B from 1.7.07.
Director is paid £5,000 up to 30.6.07 (which is in line with salary paid for last couple of years), and of course has incurred no NI. Under the new employment, does the clock for NI start again from zero? In other words, can the first £5,225 be paid without deduction of NI?
I believe the factors are sufficient to illustrate that the change of employment is genuine and that decisions are commercial, it's just, well, the same director.
Whilst the two businesses are completely different, there is one word in the name of both that is shared (which may not be relevant).
Any thoughts?
RR
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Replies (3)
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Pro-rata Annual Earnings Period
Directors are on an annual earnings period for NIC. If a director starts on 01.07.07, which is Week 13, his pro-rata period is 40/52, so his ET for paying contributions will be £4,020 up to 05.04.08 (his LEL will be £3,480, and his UEL, £26,800). Refer to CA44.
Euan
Thanks for this. I looked at CA44, and in turn CWG2 - as the businesses don't share a common purpose (two entirely separate trades), I am quite comfortable that these are two distinct employments.
Yes.
As long as you don't trip over anti-avoidance then each separate employment has a separate National insurance threshold - even if you are using the directors calculation.