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Director and employee somewhere else

National Insurance for a company director who is an employee on another company

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Hi all,

I'm currently employed in a company and am a basic taxpayer. I work on a side project with my own company, and I'd like to start extracting a salary from it.

If I pay myself £9,100/year (next year), would I have to pay any National Insurance (employer or employee)? My total yearly salary would still be within the basic tax rate.

Thanks in advance,

Alberto

 

 

Replies (15)

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By williams lester accountants
13th Dec 2021 11:31

This should be a question for the company's accountant. You need paid for advice, not random strangers advising you......

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ALISK
By atleastisoundknowledgable...
13th Dec 2021 12:05

Probably yes, but not necessarily. Does your company not have an accountant who will know your particular circumstances (and may be able to advise on more tax efficient routes)?

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By AlbertoSL
13th Dec 2021 12:16

Hi guys,
Thanks for your replies.
It's a very basic business with a low turnover, I have advanced accountancy knowledge (part-qualified ACCA) and, for now, I'm handling the accounting myself through Free Agent. However, this specific question really escaped my knowledge.
Thanks again,
Alberto

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Replying to AlbertoSL:
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By I'msorryIhaven'taclue
13th Dec 2021 12:58

Although you won't be liable to pay NI for your second employment (assuming, that is, your earnings are below the threshold) you will, based on the circumstances you have given, be liable to 20% income tax. So why not take £9.1k in divs instead, with a top tax rate (for you) of 7.5%? As a Brucie-bonus, you'll get to avoid all the hassle and expense of running RTI payroll.

I wouldn't be in too much of a hurry to run any of this past your employer or his staff. Many employee contracts contain a clause prohibiting you from holding a second job; not only to prevent you from "competing" with your employer's business, but also to stop you from yawning your head off all day.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
13th Dec 2021 13:20

And the real issue is that passing exams does not denote that the best experience has been obtained
I would go Salary as 20% trumps 19% CT and Divi tax 7.5% and rising
Having said that it really needs a chat with an accountant that does this stuff all day long as no two clients are alike and planning is better than coping after the event.
This forum is not a two way chat where question 2 depends on answer to question 1

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Replying to Paul Crowley:
ALISK
By atleastisoundknowledgable...
13th Dec 2021 13:47

Paul Crowley wrote:

A
I would go Salary as 20% trumps 19% CT and Divi tax 7.5% and rising

Assuming the op is under retirement age, I'd default to £8,840 salary, £260 dividends.

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Replying to atleastisoundknowledgable...:
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By Paul Crowley
13th Dec 2021 14:08

No idea what the real figures are but the limit before ANY NIC becomes payable. Trouble is they were in line for years then got separated again
Some commentators here say pay a bit
I prefer pay nil unless.................(Depends on circumstances)

Edit
Yes 8844
OP forgot the employers NI that does not qualify for EA

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By I'msorryIhaven'taclue
13th Dec 2021 14:00

Paul Crowley wrote:

I would go Salary as 20% trumps 19% CT and Divi tax 7.5% and rising

Thanks Paul: I didn't explain it all that well, did I? Long Covid has left me with all the acumen of Stan Laurel shifting a piano.

But yes, an additional cost of £461.50 and rising if you go the hassle-free divs route. Minus the cost of payroll software, I guess.

If the OP goes the payroll route, how likely is it (I wonder) that HMRC will inadvertently let the cat out of the bag by letting on to the main employer that there's a second job (eg via a split coding notice, or similar). Answers on a postcard, please!

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
13th Dec 2021 14:12

I think very likely
And if Op gets it sorted the HMRC computer will keep doing so at least once a year.

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Replying to I'msorryIhaven'taclue:
ALISK
By atleastisoundknowledgable...
13th Dec 2021 14:50

I'msorryIhaven'taclue wrote:

If the OP goes the payroll route, how likely is it (I wonder) that HMRC will inadvertently let the cat out of the bag by letting on to the main employer that there's a second job (eg via a split coding notice, or similar). Answers on a postcard, please!

Didn't think about that.

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Replying to atleastisoundknowledgable...:
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By AlbertoSL
13th Dec 2021 15:09

That's interesting. Are there any specific tax implications for having two employments?

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Replying to I'msorryIhaven'taclue:
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By gillybean04
13th Dec 2021 18:07

Coding notice won't tell them why a new code has been issued, or that the allowance has been split.

Might cause them to suspect, but that could be the case even if the code is changed for any other reason.

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By AlbertoSL
13th Dec 2021 13:32

Thank you all for your replies. I'll look for an accountant who can oversee all the accounting and advice me on these matters.

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By ireallyshouldknowthisbut
13th Dec 2021 16:04

Good call. I have a number of clients who are qualified accountants in their own right, including one who trained with me but took a different path into industry.

They know enough to know what they don't know....

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By Matrix
13th Dec 2021 18:14

Unless the salary could create an unrelieved loss, I don’t see a reason not to take a salary if the employments are unconnected and the increased earnings don’t bring you into a new tax band, You say you are a basic rate taxpayer so loss of CB or PA not an issue.

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