Reply to: One man band LTD company & Auto Enrolment in a pension scheme

[Jessica@WhiteFieldTax]

Hiding as we don't fully understand either

My understanding is that:

1 a director or secretary, collectively "officer" can receive a salary without having a contract of employment. In whch case AE doesn't apply regardless of numbers of officers and salary amounts

2 a non officer, eg spouse on a salary but not appointed as secretary - brings the company into AE - contract can be written on verbal, but as the person is not an officer it is employed there must be a contract.

I'm going to get my tax manager to specifically ask TPR to confirm our understanding on this



Its my reading as well, I noticed it when I revisited AE last week having let it stew for a year. In which case to do the Declaration you have to nominate a pension scheme as well which, I presume, means registering with NEST or similar.

Again getting my office to check with TPR

Its a nuisance if all one person / officer only companies need to do this if they are otherwise outside AE.

The alternative may be that a one person / officer only company just ignores AE and declaration, and if TPR sent an enforcement letter of some sort, reply with "we are exempt". Not ideal.

It may well be that with the bulk of small companies not yet in AE the TPR hasn't thought the practicalities through yet.

Update from a conversation with TPR

~ companies whose payroll comprises one director only, with any other directors or secretaries unpaid can notify the Pension Regulator by email that they are exempt from Auto Enrolment

~ companies with two people on payroll, regardless of salary levels and officer status need to register with TPR and nominate a pension scheme, eg Nest, even if salaries are below thresholds.

In summary the only exemption from registration and nomination of a pension scheme is where there is only one person on the payroll and they are a director.

This is our current understanding from talking to TPR. How it pans out n practice, well, anyone's guess.

[Jessica@WhiteFieldTax]

I think that's the case, but need to check with TPR.

It's hoop jumping. You and her can opt out anyway, it's just how much paperwork is needed to get there.

[SteelyDan]

Hiding as we don't fully understand either

My understanding is that:

1 a director or secretary, collectively "officer" can receive a salary without having a contract of employment. In whch case AE doesn't apply regardless of numbers of officers and salary amounts

2 a non officer, eg spouse on a salary but not appointed as secretary - brings the company into AE - contract can be written on verbal, but as the person is not an officer it is employed there must be a contract.

I'm going to get my tax manager to specifically ask TPR to confirm our understanding on this.

Thanks Jessica.

So based on the above understanding (& pending confirmation), in my circs;

• Wife is officer (company secretary) & receives salary, but there is no contract of employment, apart from one that is 'implied' as she receives a salary from MyCo.
• I am officer (Co Dir) & receive salary.

AE doesn't apply according to your current understanding?

[Jessica@WhiteFieldTax]

Where are the Accountants on CUK when you need them? Any other time they're all over stuff like a rash

Hiding as we don't fully understand either

My understanding is that:

1 a director or secretary, collectively "officer" can receive a salary without having a contract of employment. In whch case AE doesn't apply regardless of numbers of officers and salary amounts

2 a non officer, eg spouse on a salary but not appointed as secretary - brings the company into AE - contract can be written on verbal, but as the person is not an officer it is employed there must be a contract.

I'm going to get my tax manager to specifically ask TPR to confirm our understanding on this

I guess this might be worh pointing out: even if auto enrolment doesn't apply to us, it looks like we might have to submit this declaration of compliance. Anybody know about this?

Automatic Enrolment Declaration of compliance (registration) | The Pensions Regulator

Its my reading as well, I noticed it when I revisited AE last week having let it stew for a year. In which case to do the Declaration you have to nominate a pension scheme as well which, I presume, means registering with NEST or similar.

Again getting my office to check with TPR

Its a nuisance if all one person / officer only companies need to do this if they are otherwise outside AE.

The alternative may be that a one person / officer only company just ignores AE and declaration, and if TPR sent an enforcement letter of some sort, reply with "we are exempt". Not ideal.

It may well be that with the bulk of small companies not yet in AE the TPR hasn't thought the practicalities through yet.

[TheCyclingProgrammer]

I guess this might be worh pointing out: even if auto enrolment doesn't apply to us, it looks like we might have to submit this declaration of compliance. Anybody know about this?

Automatic Enrolment Declaration of compliance (registration) | The Pensions Regulator

Looks like we still have 3 years until this becomes relevant anyway.

[TheCyclingProgrammer]

Hmm not sure, unless I've misread the notes, there is no requirement for a physical 'contract' to be in place, but if you/your wife are drawing a salary then an 'implied' contract exists.

Although the notes referred to them, I didn't see any threshold figures on salary levels either.

Where are the Accountants on CUK when you need them? Any other time they're all over stuff like a rash

Thresholds here:

Automatic enrolment earnings threshold | The Pensions Regulator

They appear to be inline with the personal tax allowance.

I don't think receiving a salary automatically implies that the person is a worker. It's not unreasonable to receive a basic salary related to your role as company officer. Nevertheless, if the salary is below the above thresholds I don't think there is any requirement to auto enroll, although I think technically your spouse should have the option to opt in.

[TheCyclingProgrammer]

As I understand it, if the two spouses are owners/directors (and without contracts of employment of course), then the amount of salary they take is irrelevant.

Yes I was more referring to when the spouse is just an employee or has a contract of employment.

[SteelyDan]

As I understand it, if the two spouses are owners/directors (and without contracts of employment of course), then the amount of salary they take is irrelevant.

Hmm not sure, unless I've misread the notes, there is no requirement for a physical 'contract' to be in place, but if you/your wife are drawing a salary then an 'implied' contract exists.

Although the notes referred to them, I didn't see any threshold figures on salary levels either.

Where are the Accountants on CUK when you need them? Any other time they're all over stuff like a rash

[Forbes Young]

I'd say that you are potentially within the scope of auto enrolment but whether you HAVE to auto enroll probably depends on how much you pay yourself and your wife as salary. There are thresholds.

My wife is company secretary but she also performs other roles in return for a modest salary. It's well below the threshold for AE though.

My own accountant is still doing his own research into this so didn't have a definitive answer for me yet but I'm not too worried about it.

If your spouse is just a company officer then this wouldn't normally make her a worker unless she also has a contract of employment.

As I understand it, if the two spouses are owners/directors (and without contracts of employment of course), then the amount of salary they take is irrelevant.

[TheCyclingProgrammer]

Spoke to a/c this morning.
Seems that, as MyCo employs wife, and she receives a salary, then I need to comply with this

Not doubting what they say, but anyone else received conflicting views on this, particular this previous forum comment: "In other words contractors running a single person or two person operation (with their spouse) are not under the definition of a “jobholder”."?

I'd say that you are potentially within the scope of auto enrolment but whether you HAVE to auto enroll probably depends on how much you pay yourself and your wife as salary. There are thresholds.

My wife is company secretary but she also performs other roles in return for a modest salary. It's well below the threshold for AE though.

My own accountant is still doing his own research into this so didn't have a definitive answer for me yet but I'm not too worried about it.

If your spouse is just a company officer then this wouldn't normally make her a worker unless she also has a contract of employment.

[SteelyDan]

Spoke to a/c this morning.
Seems that, as MyCo employs wife, and she receives a salary, then I need to comply with this

Not doubting what they say, but anyone else received conflicting views on this, particular this previous forum comment: "In other words contractors running a single person or two person operation (with their spouse) are not under the definition of a “jobholder”."?

[TheCyclingProgrammer]

It could be a 10 man company and not need auto enrolment, but if a company runs a PAYE scheme, meaning paying wages to even one worker then auto enrolment is needed.

If what you're saying is a one man company has to auto enroll just because they operate a PAYE scheme, then you're talking rubbish.

[franktouch]

It could be a 10 man company and not need auto enrolment, but if a company runs a PAYE scheme, meaning paying wages to even one worker then auto enrolment is needed.

[SteelyDan]

Yes - its our understanding that if you are a one person operation running through your own ltd company as a worker/director/shareholder, then autoenrolment doesnt apply. It is extremely rare that any such person would have a contract of employment and would not be categorised as a "job holder".
Similarly if there is a husband/wife team operating though their own ltd company and share-split, they would not be caught by these regulations either - again neither would tend to have a contract of employment and their company would make supplies via contracts for services.

So what's the definitive answer on this?

I received a letter recently from Pensions Regulator, but until I read all the associated gumpf, I can't yet work out if, under current arrangements, this applies (Me-Co Dir & shareholder; Wife-employee & shareholder). What are others doing with similar MyCo set-ups?
I'll run it past my accountant next week, but in the interim...

[Forbes Young]

Have you not answered your own question in your original post?

One-person companies
29.
If an individual is a director of a company and the company has no
other employees, that individual is not a worker by virtue of any
office that they hold or contract of employment under which they
work. The company is therefore not subject to the employer dutiesin relation to that individual.

Yes - its our understanding that if you are a one person operation running through your own ltd company as a worker/director/shareholder, then autoenrolment doesnt apply. It is extremely rare that any such person would have a contract of employment and would not be categorised as a "job holder".
Similarly if there is a husband/wife team operating though their own ltd company and share-split, they would not be caught by these regulations either - again neither would tend to have a contract of employment and their company would make supplies via contracts for services.