Forum

• # 86656
• Sun 18 Nov 2012 07:27 PM

Hi Guys,

Need some guidance from a payroll qualified member out there.

I have a new client starting shortly who requires book keeping etc.

He has just started as a director of his Ltd company but is still employed on a full-time basis with an employer.

He is getting paid through his employer through PAYE.  He is looking to take a monthly salry from the Ltd company as he wants this included as an expense before dividends are paid to him and another director (The other director does not carry out any work for the company).

If he pays himself a salary, would this be taxed at basic rate at source as he is also employed?  What are the NI implications?

I told him this is not my specialist area but I would like to know the answer if anyone out there can help in case I am asked again. 

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• # 86674
• Mon 19 Nov 2012 02:33 PM

Hi Lee

He will need to be taxed which will be at Basic Rate and his earning will be NIable.

As a company director he will required to fill in a self assesment tax return and so will put both employments, Dividends etc on there. This will then work out what he should have paid overall and there will be a correction for any over / underpayments of Tax and NI.

He may have underpayment arising as he will be tax at basic rate though he may have gonw into the higher rate bracket.

There are other options open to him as the other director who does not do any work in the company can do a full or partial dividend waiver so there be no need for the first director to take a salary to reduce the profit prior to dividends being declared.

As an AICB you should only be doing the bookkeeping upto the TB and as this is an area beyond the TB my advice to you would be to advise them to speak to their accountant in order to sort this and then let you know what is happening so you can record it in the books.

Kind regards
Stuart Wildman

• Forum Moderator, South East & Greater London Regional Chairman
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