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  • FIRST POST
    • DavidJonas
    • By DavidJonas 2nd Dec 19, 7:34 PM
    • 106Posts
    • 77Thanks
    DavidJonas
    Director, how do I pay myself?
    • #1
    • 2nd Dec 19, 7:34 PM
    Director, how do I pay myself? 2nd Dec 19 at 7:34 PM
    I have set up a little business - a private limited company of which I am the sole director which - currently and probably for at least the next year or so - is destined to pay me 500 a month. That is all I intend to take out. It will be my only employment income.

    I assumed this would involve PAYE but when I looked at registering as an employer that is only suitable if you will be paying 118+ per week, which is not the case here. Close, but less than 118 per week (which is 6136 pa)

    Nor does 6000 seem to trigger any sort of national insurance - for employee or employer.

    So, how do I pay myself? Is it really as simple as just invoicing the company and making a bank transfer? Then everything shakes out in self assessment, company accounts/corp tax etc.

    Sounds too easy somehow.
Page 1
    • jaybeetoo
    • By jaybeetoo 2nd Dec 19, 7:51 PM
    • 1,090 Posts
    • 613 Thanks
    jaybeetoo
    • #2
    • 2nd Dec 19, 7:51 PM
    • #2
    • 2nd Dec 19, 7:51 PM
    Do you have any other income?
    • DavidJonas
    • By DavidJonas 2nd Dec 19, 7:56 PM
    • 106 Posts
    • 77 Thanks
    DavidJonas
    • #3
    • 2nd Dec 19, 7:56 PM
    • #3
    • 2nd Dec 19, 7:56 PM
    Yes, but not from employment. Not a pension yet, either.

    Which seems to chop off all the routes through the HMRC "register as an employer" pathway. Not proposing to take any expenses/benefits.
    Last edited by DavidJonas; 02-12-2019 at 8:02 PM.
    • Pennywise
    • By Pennywise 2nd Dec 19, 8:06 PM
    • 12,359 Posts
    • 24,642 Thanks
    Pennywise
    • #4
    • 2nd Dec 19, 8:06 PM
    • #4
    • 2nd Dec 19, 8:06 PM
    You can still register as an employer and pay via PAYE. Not ticking their boxes doesn't mean you can't do it - it means you don't have to.
    • DavidJonas
    • By DavidJonas 2nd Dec 19, 8:10 PM
    • 106 Posts
    • 77 Thanks
    DavidJonas
    • #5
    • 2nd Dec 19, 8:10 PM
    • #5
    • 2nd Dec 19, 8:10 PM
    You can still register as an employer and pay via PAYE. Not ticking their boxes doesn't mean you can't do it - it means you don't have to.
    Originally posted by Pennywise
    Okay.

    But if I don't, the alternative is presumably just to write myself cheques and keep a record?

    I won't do anything solely on the basis of this advice, but it is helpful to get a feel for the alternatives.
    • 00ec25
    • By 00ec25 2nd Dec 19, 9:54 PM
    • 8,755 Posts
    • 8,678 Thanks
    00ec25
    • #6
    • 2nd Dec 19, 9:54 PM
    • #6
    • 2nd Dec 19, 9:54 PM
    But if I don't, the alternative is presumably just to write myself cheques and keep a record?
    Originally posted by DavidJonas
    "you1" (the employer) are not required to operate PAYE because "you2" (the employee) will earn below the threshold.

    so yes, in principle You1 pays You2 and records that fact in its accounts as a pay cost. You2 records the income and declares that on their tax return because i find it unlikely you have total income from all sources of less than the personal allowance?

    as for thresholds: see https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2019-to-2020

    if you2 earns less than 118 per week then think carefully because you will not get a credit towards state pension.

    Alternatively, if you2 earns between 118 - 166 (ie 719 per month) you1 will not have to pay any employers NI and you2 will not pay employee NI, but crucially you2 will get a pension credit despite not physically paying tax.

    that sort of tax planning is why you use an accountant, particularly if the company is profitable and you want to take out dividends instead of, / as well as, pay...

    PS be very careful to behave as though it were pay, ie regular, same amount etc. Otherwise, if you go ad hoc, it could look like a loan and/or undeclared dividend. Both have repercussions if incorrectly recorded.
    Last edited by 00ec25; 03-12-2019 at 12:44 PM.
    • DavidJonas
    • By DavidJonas 2nd Dec 19, 10:15 PM
    • 106 Posts
    • 77 Thanks
    DavidJonas
    • #7
    • 2nd Dec 19, 10:15 PM
    • #7
    • 2nd Dec 19, 10:15 PM
    Thank you, that is very helpful!
    • Kim kim
    • By Kim kim 2nd Dec 19, 11:08 PM
    • 2,988 Posts
    • 4,159 Thanks
    Kim kim
    • #8
    • 2nd Dec 19, 11:08 PM
    • #8
    • 2nd Dec 19, 11:08 PM
    Yes, but not from employment. Not a pension yet, either.

    Which seems to chop off all the routes through the HMRC "register as an employer" pathway. Not proposing to take any expenses/benefits.
    Originally posted by DavidJonas
    You pay tax & NI on your total income.

    So you add your income from your other jobs to this & you pay tax on it as a whole.
    • 00ec25
    • By 00ec25 3rd Dec 19, 12:45 PM
    • 8,755 Posts
    • 8,678 Thanks
    00ec25
    • #9
    • 3rd Dec 19, 12:45 PM
    • #9
    • 3rd Dec 19, 12:45 PM
    You pay tax & NI on your total income.

    So you add your income from your other jobs to this & you pay tax on it as a whole.
    Originally posted by Kim kim
    income tax yes, but that is not how NI works
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