Hi
I have just taken over the payroll from another accountant.
I noticed one of the employees (age 59) has been earning £1340 per month but there has been no employers or employee deductions (tax has been deducted) and trying to understand why. Any ideas
Thanks
Replies (11)
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As a director, his NI will be calculated cumulatively, so he will only suffer deductions once his cumulative pay in the year exceeds £8,060, after which time he will suffer NI deductions at 12% on anything above that amount
Yes NI applies, but for directors it is cumulative (which is why the previous posters asked) no NI until pay reaches the threshold for the year to date. So at £1,340 per month will not kick in until circa month 7.
@lion - yes for NI.
If the person has elected to continue to pay NI or it's equivalent in another country as is possible in some of the agreements, payroll operators may not be aware of the personal circumstances but will have received an NT code (for NI purposes only) from HMRC.
@lion - I believe NT codes take the earnings outside the scope of Nic so apply to both, but in practice have only operated them on non-resident, non-uk duties, so could be wrong. Nothing new there.