Paying salary in one go

[northernladuk]

OK. For those of us who pay the most tax efficient salary to themselves (£7500 or whatever).

Reason I understand is that its because this way no tax or NI is due (although no NI is credited) which leaves just CT on any dividends.
BUT, I guess, if for whatever reason, part way through the year you stop paying a salary, then it could end up with the situation that you don;t use your full tax allowance.

So, why not just pay yourself the whole £7500 up front at the start of the year when you can? Is there any reason you can't do this? Apart from the fact that it looks a bit dodgy I guess.

Why don't you up the 75.k to just over the threshold so you pay some NI so you can claim more on JSA?

[psychocandy]

Why don't you up the 75.k to just over the threshold so you pay some NI so you can claim more on JSA?

No need. The threshold where your considered to have paid NI is slightly lower than before you actually have to pay it.

i.e You need to earn minimum of £A to qualify but £B before you start paying so make sure salary is between A and B.

[ASB]

I think HMRC doe understand the idea of an annual pay period. So NI would be fine - for a director - using the appropriate method. Can you do it for PAYE? Don't think so, so would attract a heap of tax in the month it was paid and slow rebates or reclaim on the SATR.

Also it would need to be an accrual in the books, dependant upon when the corporate year end was of course.

RTI had problems with it, but trying to be fixed.

HM Revenue & Customs: Real Time Information and annual schemes

[Contreras]

Reason I understand is that its because this way no tax or NI is due (although no NI is credited) which leaves just CT on any dividends.
BUT, I guess, if for whatever reason, part way through the year you stop paying a salary, then it could end up with the situation that you don;t use your full tax allowance.

Eh, what? Such as?

So, why not just pay yourself the whole £7500 up front at the start of the year when you can? Is there any reason you can't do this? Apart from the fact that it looks a bit dodgy I guess.

Dodgy... The company has the money available in month 1 but can't manage to pay the salary in instalments?

lol.

Learned opinion is that advance salary effectively creates a director's loan - it's difficult to show that the company has no right of recovery. Will be interesting to see if the new regime of RTI changes this view.

[Old Greg]

Why don't you up the 75.k to just over the threshold so you pay some NI so you can claim more on JSA?

Beat me to it! He can sign on 51 weeks per year.

[psychocandy]

Beat me to it! He can sign on 51 weeks per year.

Contrib JSA only lasts 6 months fellas!

[CheeseSlice]

Learned opinion is that advance salary effectively creates a director's loan

Surely if he was to log it as 'net salary and bonus' then NICs and PAYE tax would be due. Just like a one off bonus, no?

[Contreras]

Surely if he was to log it as 'net salary and bonus' then NICs and PAYE tax would be due. Just like a one off bonus, no?

My thoughts too, but the advice is often that it would be treated as a loan - maybe because for quite a few contractors maintaining a ledger is beyond them and the accountant just sorts out the mess at year end.