Directors salay and NI

[jackiebabes]

Could someone please clarify the correct way of dealing with a director's ni through the payroll. Company I work for has the director as an ordinary employee and ni has been dealt with accordingly. What needs to be done?

Thanks

[hashman]

That's fine - but at the end of the year you have to recompute by reference to the annual limits.

[jackiebabes]

Do you mean instead of pro-rata, but ending up with more or less same figures?

[hashman]

You work it out on a payment basis as you go through the year but then after the end of the year you take the director's total pay and work out the NIC that would have been paid if he had been paid that amount on 31 March. This is supposed to avoid manipulation of earnings by the director to give a lower weekly or monthly NIC bill. But if he is paid the same amount on a regular basis then the answers should come out the same.

[jackiebabes]

Thanks, thats great.