Director of a Ltd company do not pay NI?

fpd_2

Thanks for the advice every one, I'm going to double check the above things with my accountant, as they assure me I am still fully covered for everything.

prowla

The other aspect is whether you want to pay into a pension - funding it from salary versus from dividends.

Mojisola

fpd wrote: »

as an employee of my company I get all these benefits when I am paid the salary, including the full state pension. But I do not physically pay any NI. This is my concern...

How are building up your entitlement to these benefits if you're not paying any NI contributions?

xylophone

How are building up your entitlement to these benefits if you're not paying any NI contributions?

Something along these lines?http://www.contractoruk.com/money/national_insurance_contractors_guide.html

fpd_2

I have been on to my accountants today and they can confirm that I am eligible for:

Basic State Pension
Additional State Pension, sometimes called the State Second Pension
Contributions Based Jobseeker's Allowance
Contributions Based Employment and Support Allowance
Maternity Allowance
Bereavement Allowance, Bereavement Payment and Widowed Parent's Allowance
Incapacity Benefit

Has anyone else ever heard of this, or does this not sound right to anyone?

shedboy94

It's a tax dodge, but a perfectly legal loophole.

fpd_2

Wow, well it sounds like it's legit then. Lucky me...

System

Doing things like that is normally a good way to get HMRC going through your books and probably investigating the IR35 angle to boot.

BigAunty

!!!!!! wrote: »

Doing things like that is normally a good way to get HMRC going through your books and probably investigating the IR35 angle to boot.

My partner has been through one of these compliance interviews where the HMRC regularly target IT contractors (and rarely win the case but this doesn't deter them).

The HMRC wish to prove that the contractor is not truly self-employed (there's various factors they consider, including length of time of the contract, if the terms/conditions are more like regular employment than being self employed, such as fixed hours of work, not being able to substitute yourself with another employee and so on, it's quite complex).

They hope to make the contractor pay back lots of PAYE tax and NI contributions.

It's just a shame that the govt won't sort something out to stop the witch hunts by the HMRC which don't yield much more tax and ensure that NI is paid by all, including company directors.

"Of all the cases PCG's expert advisers have been involved in, PCG members have won 1,485 cases and HMRC has won just 8 (correct as of March 2010). "


http://www.pcg.org.uk/cms/index.php?option=com_content&view=category&layout=blog&id=666&Itemid=1092

fpd_2

Yeah IR35 try to suss out if what you are doing is 'disguised employment'. I am truly self-employed, and my books are pretty good too, so even if this was to happen, I'm sure I would be fine. Even with this, is seems too good to be true.