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Director salary and State pension


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I know that a year in which the director is paid 12 monthly salary payments of the LEL will qualify as a year towards the State pension.

However, does the year still count if instead just one salary payment is made in the year equal to 12 x LEL? So 11 x £0, then 1 x £6,240.

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By Paul Crowley
21st Sep 2020 11:44

it is total for year that counts

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By Wanderer
21st Sep 2020 12:02

Yes, but you MUST ensure that the director's flag is set in the software.

I've always thought however that this is a potentially dangerous ploy. Most of my director clients are paid at least the Primary Threshold so some, albeit a small amount, of NI is paid. This has always forced HMRC to actually process the figures, particularly in the pre RTI and manual P14 days. If this is done it will be much easier to prove entitlement 20 or 30 years down the line when NICO say they have no record or missing years.

Also the recent CJRS debacle surrounding annual schemes makes this a dangerous policy to follow.

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By ireallyshouldknowthisbut
21st Sep 2020 12:10

Yes we (used to pre covid) run annual directors PAYE like that and I know it shows up on the pension record all fine.

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Red Leader
By Red Leader
21st Sep 2020 12:42

Thanks for the reassurance. I was doing the monthly filings and having a slight panic about some of them.

Some of the directors have a low PAYE code, so I set up a much lower monthly pay for M1-11 and then top up with M12. In that way, the director only has to pay PAYE once. I've never used annual payrolls (as opposed to annual director's NI calculation) which would be another way round it I suppose.

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