Closing LTD company and moving abroad

pierschester

Hello, hope you're doing well everyone.

I'm moving abroad in a few months which will lead to me closing down my LTD company. I already took the salary from April (£1,047.50) and have about £15,000 left (after paying corporation tax). I would like to use the remaining cash to pay myself a salary up to the personal allowance in order to save CT and also get one year of NI contributions.
My understanding is, that such a high salary at the beginning of the the tax year will cause a big tax bill (since HMRC is going to assume that I'll get this salary each month for the rest of the year). Is there a way to avoid getting overtaxed? Assuming this will be the last payslip (final FPS), will HMRC account for that and not overtax me?

Thank you

Ferro

https://www.gov.uk/guidance/get-your-income-tax-right-if-youre-leaving-the-uk-p85

Dazed_and_C0nfused

pierschester said:

Hello, hope you're doing well everyone.

I'm moving abroad in a few months which will lead to me closing down my LTD company. I already took the salary from April (£1,047.50) and have about £15,000 left (after paying corporation tax). I would like to use the remaining cash to pay myself a salary up to the personal allowance in order to save CT and also get one year of NI contributions.
My understanding is, that such a high salary at the beginning of the the tax year will cause a big tax bill (since HMRC is going to assume that I'll get this salary each month for the rest of the year). Is there a way to avoid getting overtaxed? Assuming this will be the last payslip (final FPS), will HMRC account for that and not overtax me?

Thank you

HMRC don't get involved, your employer will deduct the appropriate tax based on the taxable earnings and pay period it is paid in.

But tax deducted during the year is only ever provisional, if you are due a refund then that will be resolved in due course, either by HMRC reviewing the year or your Self Assessment return if you need to file one.

pierschester

HMRC don't get involved, your employer will deduct the appropriate tax based on the taxable earnings and pay period it is paid in.

Well I'm the employer. So I just calculate the tax, not HMRC? I'm using freeagent, will it do that for me?

Dazed_and_C0nfused

pierschester said:

HMRC don't get involved, your employer will deduct the appropriate tax based on the taxable earnings and pay period it is paid in.

Well I'm the employer. So I just calculate the tax, not HMRC? I'm using freeagent, will it do that for me?

You can't employer yourself, I presume you mean the limited company.  An important distinction!

Anyway, inn't that what payroll software is meant to do, amongst other things, calculate the tax and NI that needs to be deducted 🤔

Ferro

Process the payroll with the appropriate deductions according to the regulations.

Issue a P45. Go through the P85 procedure. 

SiliconChip

If you're making a one-off payment to use up the £15K then that is very unlikely to earn you a year of NICs, as NI is only levied on a weekly/monthly payment basis, and the amount contributed is only one factor in determining whether a full year is granted.

Ferro

SiliconChip said:

If you're making a one-off payment to use up the £15K then that is very unlikely to earn you a year of NICs, as NI is only levied on a weekly/monthly payment basis, and the amount contributed is only one factor in determining whether a full year is granted.

Not necessarily true. NI for directors is calculated differently. 

In the case where payment made in month 1. NI will be paid as follows:

NI in month 1 - average salary £15000/12 = £1250. Calculate NI on £1250. Multiply by 12. That is NI payable in Month 1. 

https://www.gov.uk/employee-directors

https://gb-kb.sage.com/portal/app/portlets/results/viewsolution.jsp?solutionid=200427112157618&hypermediatext=null