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Where Taxpayers and Advisers Meet

Part year NI/PAYE

WomblingAlong
Posts: 1
Joined: Wed Jan 24, 2018 5:55 pm

Part year NI/PAYE

Postby WomblingAlong » Wed Jan 24, 2018 6:29 pm

Hi,
I have listed a few related queries together. I hope this is ok, but please advise if I should ask in a different way.

Background
  • Employed the first part of the 17/18 tax year, earning approx 25k and paying tax and NI through my employers PAYE and have therefore used up all my personal allowance
  • Set up my a limited company in October, with me as sole director, initially contracting by myself, but with longer term plans to grow the company
  • I've won some work with a few companies over past few months, which have been invoiced and paid (although no payments received for first 2 months)
  • I thought I'd registered for corp tax and PAYE when I set company up, as filled in forms, but never received any details in post apart from companies house so had to chase to receive my different registrations, which I think are now all sorted, with company set up to use Basic PAYE tools.
  • This meant I haven't been able to officially record myself as an employee or pay myself anything
  • There is currently circa £10k in the company account
  • Following advice, I intend to pay myself £8146 pa via PAYE to maintain national insurance record but minimise Income Tax and NI contributions, with the balance paid through dividends
  • As I already have tax and NI payments for the first 4 months of the tax year over my personal allowance, I am thinking about not paying myself any PAYE until the next tax year
However, I am confused about the impact my previous employment and subsequent gap in PAYE has

Queries
  • Will I have sufficient NI contributions from the first 4 months to get enough NI credits for 2017/18?
  • If not, what is the best way to rectify this?
  • Am I ok to not pay myself via PAYE until next April - linked to NI above, but also for good practice
  • As I am now employed and registered via Basic PAYE tools (I entered start date early Oct) but without any payroll payment, do I need to do anything each month until I plan to pay myself in April?
  • Is there a more sensible way to think about any of the above?
Please advice if I need to structure this post in a different way or need to provide any more info. Thanks for any help.

RMC
Posts: 431
Joined: Wed Aug 06, 2008 3:35 pm

Re: Part year NI/PAYE

Postby RMC » Tue Feb 27, 2018 9:20 am

To preserve your NIC record for 2017/18, you’ll need to pay yourself salary of at least £113 per week, viz. at Lower Earnings Limit (LEL) level bearing free NIC, in the part of tax year after leaving your employment. Should be paid as lump sum. Choose ‘standard annual earnings period method’ for directors. Must be reported as paid by 5.4.2018. No actual payment needed, credit to your Director’s Loan Account is fine.

What to do:
Pay dividend equal to dividend allowance £2,000.
Pay salary between LEL and PT £157 p.w. in one lump sum between 6.3.-5.4.2018. You should earn yourself some tax refund.


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