WAGES & DLA

by **Jambo55** on Wed Nov 23, 2011 2:41 pm

Hi All,

Say, a ltd company has a director (sole) and no other employees, the director has never drawn a salary (it is a small business and they work full time - plus its not tax effcient to take a salary at the moment (personally)), also no dividends have ever been taken. Just calculating year end profits and they are relatively high - here is my question, I am either very stupid or have had a brain wave-

Can I accrue directors wages to the DLA, reducing the profits / CT payable, BUT without having to register the company for PAYE etc etc? My thinking is accrue these for a couple of these and then actually pay them out when required - I pressume I would pay the tax at the payment date?

Are there any other implications to be aware of?

Many thanks

by **towat** on Wed Nov 23, 2011 5:51 pm

No you can't do that.

You can declare a bonus after the year end but in order to get a Corporation Tax deduction the PAYE and NI must be paid within a strict time limit following the year end, can't remember what it is without checking, 9 months rings a bell but seems too generous, someone else will confirm.

Either way you would have to be registered for PAYE.

You can accrue dividends in the way you suggest, subject to completing the necessary paperwork, but of course that would not reduce your Corp Tax liability.

by **mullet** on Wed Nov 23, 2011 11:23 pm

Can I accrue directors wages to the DLA, reducing the profits / CT payable, BUT without having to register the company for PAYE etc etc? My thinking is accrue these for a couple of these and then actually pay them out when required - I pressume I would pay the tax at the payment date?

And the PAYE angle - tax and NICs must be accounted for at the point that the money is credited to the director's loan account. So no, not a good idea I'm afraid.

by **Jambo55** on Thu Nov 24, 2011 11:49 am

nevermind, back to the drawing board.....what about.......-only joking!!

Thanks for the replys

by **Incredulum** on Thu Nov 24, 2011 8:16 pm

towat wrote:You can declare a bonus after the year end but in order to get a Corporation Tax deduction the PAYE and NI must be paid within a strict time limit following the year end, can't remember what it is without checking, 9 months rings a bell but seems too generous, someone else will confirm.

9 months it is. Sensible, actually, it allows the calculation of bonuses which may take some months.