Auto Enrolment Exeptions

[Jessica@WhiteFieldTax]

The Pensions Regulator has put a page up on exemptions for small co directors from Auto Enrolment.

Worth a read

Director exemptions from automatic enrolment | The Pensions Regulator

[TheCyclingProgrammer]

So they've finally clarified that these special rules do *not* apply to company secretaries too.

So for those of us whose spouse/partner is company secretary and also does basic admin duties and is paid a salary, its possible they could be classed as a worker if there is an employment contract in place:

For example, a company secretary's contract might cover additional administrative services that they provide to the company, but not their official duties as company secretary. In this situation, the office-holder is classed as a worker, but only their income under the employment contract is counted for automatic enrolment purposes.

I've already told TPR that I'm not an employer for the purposes of auto-enrolment and now it seems like this might be wrong - there isn't an explicit employment contract but there were company minutes documenting her appointment as company secretary and her additional duties (plus her salary). IMO this could be construed as an implied contract of employment:

* if the husband or wife who holds a recognised office such as company secretary, does not have a contract of employment - and only performs the official duties of that office (such as submitting the annual return to Companies House) - they are exempt from automatic enrolment
* if the husband or wife who is company secretary has a contract of employment, they would not be exempt even if the contract only applies to additional work that they do over and above their official responsibilities

I was planning to make my wife a director anyway and I might get that done sooner rather than later.

[Jessica@WhiteFieldTax]

You may find

However, if there is no written contract of employment, or other evidence of an intention to create an employer/worker relationship between the company and a director or directors, we will not seek to argue that an implied contract of employment exists.

helps you. If your minutes merely documented a decision to engage help on particular terms for particular reasons then there is at least enough uncertainty around implied contract of employment to trigger the last limb.

[TheCyclingProgrammer]

helps you. If your minutes merely documented a decision to engage help on particular terms for particular reasons then there is at least enough uncertainty around implied contract of employment to trigger the last limb.

I suppose. IIRC, the minutes simply outlined that a) The company was appointing my wife as company secretary, b) that she would have additional duties in relation to this role and a brief outline of what they are and c) what her salary would be.

OTOH there's reason not to appoint her as director as far as I can see and if I do then even if there's an implied contract there wouldn't be any requirement at all.

[WilliamR]

I was planning to make my wife a director anyway and I might get that done sooner rather than later.

In the same position here. Just to clarify, are you planning to add your wife as a director in addition to being the named company secretary, or just director and drop the secretary role completely?

Are there any downsides or surprises when adding someone as a director? All I can think of is joint legal responsibility in the event of some situation such as HMRC ever being unhappy with tax arrangements, heaven forbid (IR35 audits and all that).

I want to name my wife as director (she's currently secretary) so I can state that all staff are directors with no contract of employment and are thus exempt from pension autoenrolment. I just want to make sure there isn't some side effect I haven't thought of, like tax status or something.

[TheCyclingProgrammer]

No I don't think so. I just appointed mine as a director, didn't bother resigning her as company secretary so she's both.

Yes there is joint legal responsibility. IR35 doesn't come into it I don't think as that's a personal taxation matter.

[sal]

The only downside i can think of, of switching your spouse from secretary to director is the mandatory Self-assessment for director, AFAIK secretaries don't have to submit.

[Maslins]

The only downside i can think of, of switching your spouse from secretary to director is the mandatory Self-assessment for director, AFAIK secretaries don't have to submit.

A couple of things to say to that:
1) there is no law that says directors have to do self assessments...it's just (bad) HMRC interpretation of the law.
2) especially with the new "dividend tax", lots of secondary shareholders are going to have to start doing tax returns where they didn't before (irrespective of any office holder position). Previously they could have £8k salary and £30k divis and suffer no personal tax, now they need just ~£8k divis with that same salary to suffer personal tax.

More generally, quite a few of our clients have recently "promoted" their spouses/similar. Yes there's some extra legal responsibilities on them in case things go bad, but it potentially gets the company out of auto enrolment, and also can have some knock on benefits, eg things like qualifying for entrepreneurs relief upon possible future windup, where a "normal employee" might fail.

[TheCyclingProgrammer]

The only downside i can think of, of switching your spouse from secretary to director is the mandatory Self-assessment for director, AFAIK secretaries don't have to submit.

What Maslin said. There is no mandatory self-assessment for a company director (despite what HMRC says).

If she's also a shareholder though she'll probably need to do one anyway thanks to the dividend tax changes (unless her share is quite small).

If you use FreeAgent, it can submit self assessments for any director so it really shouldn't be more than a 10 minute job.

[MPwannadecentincome]

If there are no staff or all staff are ineligible for automatic enrolment, then the organisation would not need to set up a pension scheme or complete a declaration of compliance.

LOL I think my Ltd Co was already asked to provide a compliance declaration!