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Is PAYE and NIC to be paid on given up salary

If I earn 2k per month and give up 1k, do I pay tax and NI on 2k or 1k?

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As an example if I earn £2000 per month and would like to give up £1000 for a short while to help the company with cashflow.

I then post a journal which records this as Dr gross salary expense and Cr gross salary liability.

Does tax and NI need to be paid when the salary is processed in future date? or when the journal occurs?

Replies (14)

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By justsotax
09th Aug 2019 13:59

or perhaps they are only contributing where they feel it is appropriate or hasn't already been done to death?

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By Tax Dragon
09th Aug 2019 14:25

folk that contribute only to complain about everyone else's contributions do not help to elevate the standard of general discussion?

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By paul.benny
09th Aug 2019 14:04

It depends on how the arrangement is agreed between you and the company.

For example you could be effectively taking a short term pay cut with a promise that the company will make good the shortfall in the future. On that basis, I'd only account for tax and NI on the actual amount paid now - and account for tax and NI on the "shortfall" when that is paid. But that could create other issues - are you still complying with minimum wage legislation? If you want to accrue the shortfall in the accounts, it may not be allowable for corporation tax if it's not paid within 9 months.

But there may be other scenarios and it's difficult to give a proper answer without more information.

And more widely, if the company has cashflow issues - why? and that prompts all sorts other questions about what is should be doing other than just deferring some pay.

You need an accountant who can look at the bigger picture, get the full facts and advise accordingly.

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Psycho
By Wilson Philips
09th Aug 2019 14:31

Are you a director?

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RLI
By lionofludesch
09th Aug 2019 15:05

You don't need to pay tax and NI but, if you do it your way, you will do.

Why don't you just reduce your salary ?

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By Whosane
06th Sep 2019 17:55

Your right.

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By lionofludesch
06th Sep 2019 18:00

Whosane wrote:

Your right.

My right ?

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By Whosane
06th Sep 2019 18:02

As you say, its best to just reduce salary.

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By lionofludesch
06th Sep 2019 18:12

Whosane wrote:

As you say, its best to just reduce salary.

It's blindingly obvious. But you chose not to respond to the comments we made and drifted off to do your own research which merely confirmed what we;d said.

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By Whosane
06th Sep 2019 17:18

Hi All,

Thank you for all your responses. I have finally found what I was looking for and it may be helpful to post it up here.

Essentially tax and NIC is payable as soon as salary is accrued.

https://www.rossmartin.co.uk/directors/essential-know-how-94289/3020-unp...

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Replying to Whosane:
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By lionofludesch
06th Sep 2019 17:38

It's nice that you've done your own research but we already knew this. Everyone on the thread has said the same.

The issue is - why are you doing something so daft ?

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Replying to lionofludesch:
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By WhichTyler
06th Sep 2019 18:14

There are more out than in, as my grandmother used to say...

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Replying to Whosane:
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By Wanderer
06th Sep 2019 17:40

Be very careful, you have possibly reached a conclusion without fully understanding the terms you have used in your posts and / or the linked article.

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By Matrix
06th Sep 2019 19:21

My clients don’t pay NI.

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