As I understand it the minimum salary within a given tax year in order to receive credit for that year towards the state pension is £5,772. Does it matter if that salary is paid in lumps or must it be paid more equally? I'm asking because for about 10 weeks of this tax year I worked as an umbrella contractor, in between I took 7 months off and now I'm working for my own limited company and would prefer not to draw a salary as I'm already over the tax-free allowance. And then in the next tax year it would be nice to pay myself a salary of £5,772 on 6 April.
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The noddy content of .gov web site is hopeless on this.
Qualifying for Basic State Pension | Rights 4 Seniors
or State Pensions - Pensions & Annuities - Prudential UK
looks better.
In essence the old 52 x weekly LEL looks like its gone. You now need to have earned LEL in one way or another over the tax year.
Originally posted by prudential -
If you pay the lot as a big chunk rather than equally monthly then you pay a big NI hit as NI limits are on weekly-monthly basis.Comment
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You might or you might not. If you are a director then you have an annual pay period and it balances out. There are many different ways to operate but they all end the same. Though if you do us the monthly tables you will be claiming a rebate at the end of year.Originally posted by PurpleGorilla View PostComment
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Aren't there some complications around paying yours self a single salary for the year before you have earned it? I'd check that one.Originally posted by arby View Post'CUK forum personality of 2011 - Winner - Yes really!!!!
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I would be paying myself from undistributed funds earned the previous year so it's not any sort of loan if that's what you're getting at.Originally posted by northernladuk View PostComment
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It's been discussed on here a number of times. Am out at moment but will find some links. I thought HMRC would see it as a loan or something. Lemme find the links.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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If worried describe it as a bonus.Comment
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Here is a very long thread on it..
http://forums.contractoruk.com/accou...y-advance.html
and a search with all the threads around this...
https://www.google.co.uk/webhp?sourc...ntractoruk.com'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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I would say that this is not a problem any more (if it ever was) now that we have RTI.Originally posted by northernladuk View Post
The advice was, I believe, that if the sum was not out of reach of the company, i.e. it could be recalled, then in effect it was a loan. The counter argument was that if proper bookkeeping records were kept then it wasn't a problem. With RTI submissions now mandatory I think HMRC would have a hard time challenging things. That's just my opinion though.
As to the OP's question:
- No need to draw a salary if you've already exceeded the LEL this year.
- Pay dividends if you want, but get your accountant to advise how much.
- Pay salary (+ dividends) from 6/4/15 onwards.
The company must register as an employer (PAYE) before it pays salary and make RTI submissions prior to each payment. The salary can be monthly, quarterly, or annual - do inform HMRC because it will affect their expectations for RTI submissions. If done as annual lump sum then personally I would prefer it towards the end of the tax year (in fact, I do just that) despite what I said above.Comment
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