Company End of Year reporting - Directors Salary

[FlashGordon]

Hi,

Hope you guys can help me. I'm just verifying my end of year company accounts and have a question around Directors Remuneration.

1. When calculating Corporation Tax, is Employee's NI Tax deductible as an expense or is it only Employers NI. (Pretty sure it's just Employers but worth checking).

2. When completing the Directors Remuneration accounts notes, does this figure include Employee's NI (there was no Employers as it fell within the Employment allowance).

i.e.
Salary 9754.72
Employers NI 0
Employees NI 245.28
Total 10000.00

Thanks

Thanks.

[northernladuk]

Your account should be able to help with that...

[FlashGordon]

Your account should be able to help with that...

Cheers. She's asked me to sign it off but I'd like another point of view as it contradicts what I thought (which is the post).

[pr1]

regarding corp tax, the employees salary is the expense to the company (and is what is offset against corp tax)

the employee's NI is paid by the employee so although the company pass it on to HMRC via PAYE you can't double count it as it is them paying it out of their salary

in your example the salary should be 10,000 (unless for some reason you're paying yourself £9754) - the employee pays the NI out of this (it's not paid by the company, per se)

source: stranger on the internet

[Kenny@MyAccountantFriend]

Hi,

Hope you guys can help me. I'm just verifying my end of year company accounts and have a question around Directors Remuneration.

1. When calculating Corporation Tax, is Employee's NI Tax deductible as an expense or is it only Employers NI. (Pretty sure it's just Employers but worth checking).

2. When completing the Directors Remuneration accounts notes, does this figure include Employee's NI (there was no Employers as it fell within the Employment allowance).

i.e.
Salary 9754.72
Employers NI 0
Employees NI 245.28
Total 10000.00

Thanks

Thanks.

The gross salary will be shown in the acocunts as an allowable expense, this would include any employees NI and PAYE paid as well.

As such yes it is an allowable expense for the company.

[FlashGordon]

The gross salary will be shown in the acocunts as an allowable expense, this would include any employees NI and PAYE paid as well.

As such yes it is an allowable expense for the company.

My accountant won't allow the Employee's NI as an allowable expense as she indicated that it was Employers NI only. I can see that my salary is 10k and the company has taken and passed on £245.28 to HMRC (on my behalf). She explained that this is "my" NI contribution and therefore not a Company expense (therefore not offset for Corp Tax) - they just paid it for me.

Have i got that correct as it sounds different to your explanation (though I am easily confused nowadays!).

[Kenny@MyAccountantFriend]

Hi,

Hope you guys can help me. I'm just verifying my end of year company accounts and have a question around Directors Remuneration.

1. When calculating Corporation Tax, is Employee's NI Tax deductible as an expense or is it only Employers NI. (Pretty sure it's just Employers but worth checking).

2. When completing the Directors Remuneration accounts notes, does this figure include Employee's NI (there was no Employers as it fell within the Employment allowance).

i.e.
Salary 9754.72
Employers NI 0
Employees NI 245.28
Total 10000.00

Thanks

Thanks.

The gross salary will be shown in the accounts as an allowable expense, this would include any employees NI and PAYE paid as well.

As such yes it is an allowable expense for the company.

[Kenny@MyAccountantFriend]

The amount is previously deducted off your gross salary when paid to you as you receive only the net amount.

So in that sense what your accountant says is correct in that it is not a company expense.

In terms of what you see in the accounts though this would be the gross amount.

Employers NIC is the cost to the employer of having you as a staff member. Hence this is an employer cost.

Hope that clears it up for you.

[TheCyclingProgrammer]

My accountant won't allow the Employee's NI as an allowable expense as she indicated that it was Employers NI only. I can see that my salary is 10k and the company has taken and passed on £245.28 to HMRC (on my behalf). She explained that this is "my" NI contribution and therefore not a Company expense (therefore not offset for Corp Tax) - they just paid it for me.

Have i got that correct as it sounds different to your explanation (though I am easily confused nowadays!).

As has been said, the gross salary + employer's NI is a tax deductible expense for YourCo. The *employee* deductions - PAYE if any and employee NI are contained within the gross salary and are deducted by YourCo (you receive the net). So if your gross salary was £10k before any employee NI (there won't be any tax assuming you have your full personal allowance) then the £10k plus the £250 odd employers NI is offset against your CT bill.