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• # 91373
• Wed 05 Jun 2013 12:19 PM

I do some payroll work in my employed capacity.  There are 2 directors in the company.  Neither took salary in April.  Previously I would have just run the payroll for April and then paid the salary at the later date (end of May).

However, with RTI I was very aware that I shouldn't report salary paid at the end of April if they didn't actually take the salary until May.

So I ran no payroll for April and ran a double pay (£641 x 2) in May.

However, this has given a NIC liability and I'm not really sure why.  Surely there shouldn't be any liability?  If they had taken £641 in April and £641 in May, there would have been no liability.

Can anyone tell me what is going on?

I have used HMRC basic tools and 12pay to work out the payroll and both give the same figures.

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• # 91374
• Wed 05 Jun 2013 12:49 PM

Depends on which method you use for National Insurance (for Directors).

You can do it cumulatively and use year to date figures - there would be no NI for the two months as the Primary threshold hasn't been reached for the year.

Or you can basically treat them the same as normal employees (until the final payment of the year when a cumulative calculation has to be carried out). This appears to be the method you are using hence them paying NI on the £1242 which is treated as one payment. When the calculation is done at the end of the year these amounts deducted will be returned. Assuming they are kept at that level all year.




 

• . http://www.smbps.co.uk/
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• # 91375
• Wed 05 Jun 2013 01:02 PM

Thank you Peasie.

I did think it had to be to do with how the directors salaries are calculated and I know that there are two methods.  I did think that maybe month 3 might balance itself out but it didn't.  So it's good to know it will balance itself out at month 12.

With hindsight I should have used the other method, but it is done now.  Will the directors get a NI refund at the end of the year?  In reality how does this work?

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• # 91376
• Wed 05 Jun 2013 01:44 PM

Here's a screenshot when I put the details into Payroll Manager. This is the National Insurance side of the P11

• . http://www.smbps.co.uk/
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• # 91377
• Wed 05 Jun 2013 02:00 PM

Thank you so much Peasie.  You've put my mind at rest that I haven't done anything "wrong".

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