Retrospective salary payments

[leeb898]

I have been trading as a ltd company for just under one year. Up until 2 months ago I wasn't making sufficient income to pay myself a wage. In last 2 months I have made a decent amount of money.

Am I allowed to retrospectively pay myself a salary for the 7/8 months this year when I wasn't making any money? As this will all be in the same Accounting Period it seems like this should be OK. Would I show these as individual payments from the Business Current a/c for each month of Salary (Jan, Feb Mar etc...)?

[Clare@InTouch]

You could set up a salary in the current month for as much as you want, and if there have been no prior salary payments then the tax you pay should take that into account (depending on your tax code). You may have NI to pay though, as that's not calculated on a cumulative basis.

Salary payments are now reported to HMRC each month via RTI, so backdating would mean your prior submissions were incorrect, or missing, and potentially the PAYE underpaid.

What does your accountant say?

[northernladuk]

What does your accountant say?

Grrrrrrrrr!!

[Clare@InTouch]

Grrrrrrrrr!!

It's a compliment, I'm channelling your spirit

[Wanderer]

Grrrrrrrrr!!

Watch it mate, she's trying to muscle in on your territory.

[ASB]

You can pay it all in the current tax month. Since tax is cumulative this will balance out. The potential issue is ni. In normal circumstances this would have an impact on the ni paid. It could actually work to an advantage if the total paymemt is in excess of the uel.

However if you are a director then ni would normally be calculated on an annual basis. Check hmrc website for full detail on ni for directors.

The main reason for this was in fact to prevent directors from being a bit creative with payment timings and reducing ni liabilities.

The impact on yourself will of course be entirely dependant upon your own exact circumstances.

[Contreras]

You could set up a salary in the current month for as much as you want, and if there have been no prior salary payments then the tax you pay should take that into account (depending on your tax code). You may have NI to pay though, as that's not calculated on a cumulative basis.

Salary payments are now reported to HMRC each month via RTI, so backdating would mean your prior submissions were incorrect, or missing, and potentially the PAYE underpaid.

What does your accountant say?

Except for Ltd Co. directors who may opt to calculate on a cumulative basis, so no NI to pay until the threshold is breached - unless I'm missing the point again.

leeb898, you don't need to (and shouldn't) backdate anything.

What does your accountant say?

[Clare@InTouch]

Sorry I wasn't clear - that's what I meant. NI MAY be due, so if you go over the limit (monthly or annual if you're a director) then there may be a liability.

The OP didn't state what value he was thinking of, hence the slightly airy fairy "may"