Starting to draw a sallary mid year

[THEPUMA]

Cheers Sock. So do I not pay the NI until the end of the year then? I thought I had to send them the money quarterly.

If you pay yourself £5,225, there won't be an NI liability so the question is moot. There may or may not be a PAYE liability, depending upon your PAYE code. If there is one, it is probably payable quarterly.

[ASB]

Okay, I've been contracting for six months and finally have enough invoices paid to begin drawing a regular salary. Now I gather £5,225 is the most tax efficient amount to draw this year and still meet the minimum National Insurance contributions required to get a pension. However, given that we're in month 4 already, can I now take 5225/9 = £580 for each of the remaining months and still meet the NI criteria, or will the fact that NI is worked out on a weekly basis mean this won't get me enough NI to make a qualifying year?

Thanks, Tony.

That will still get you the years pension credit.

See page 24 of the attached for the mechanics of the NI calculation (which should come up wi=th an answer of zero each month).

http://www.hmrc.gov.uk/ebu/ni2003.pdf

I think the details of the calculation are also in you emplyers NI tables.

[Sockpuppet]

Directors are expempt from having to pay NMW to themseleves.

[TheFaQQer]

What was the issue with just paying the minimum wage? Is it kind of like the red rag thing?>

It's a long running debate - some argue that you should pay yourself NMW, while others say pay the bare minimum.

Not sure what the regulations are about an NMW investigation (whether someone has to complain or not about not being paid, or whether you can get done without the need for a complaint), but that's what I pay.

[smee.again]

What was the issue with just paying the minimum wage? Is it kind of like the red rag thing?>

[Sockpuppet]

If you are drawing divs once a year that is fine.

It starts to look dodgy when you draw monthly dividends!

[ittony]

You still pay monthly/quaterly you just calculate your NI on a cumulative scale if you are a director.

This means you pay no NI at the start of the year and more and more as you go on. Its to stop directors paying themselve £1 one week and £100,000 the week after as NI was supposed to be paid on reccuring payments.

I would pay over the £5225 limit. Read the threads about Nat Min wage vs. £5225.

My own opinion is that £5225 is to little to live on and unless you have large amounts of savings would make you draw dividends too often.

But thats another thread.

Is that the only reason you'd pay more then, because I must say I'm firmly in the £5225 camp vis-a-vis IR35? I intend to pay dividends annually and live off the salary plus savings until then, not that I think it makes any difference whether you're living off savings, credit cards or last years dividend cheque whilst waiting for the next one.

Cheers again!

[Sockpuppet]

You still pay monthly/quaterly you just calculate your NI on a cumulative scale if you are a director.

This means you pay no NI at the start of the year and more and more as you go on. Its to stop directors paying themselve £1 one week and £100,000 the week after as NI was supposed to be paid on reccuring payments.

I would pay over the £5225 limit. Read the threads about Nat Min wage vs. £5225.

My own opinion is that £5225 is to little to live on and unless you have large amounts of savings would make you draw dividends too often.

But thats another thread.

[ittony]

If you're a director NI is worked out per year on a cumulative basis.

So yes take £580 per month.

Cheers Sock. So do I not pay the NI until the end of the year then? I thought I had to send them the money quarterly.

Also, do you know if I have to draw at least £5,225 precisely in order make up a qualifying NI year, or wouldn't it matter if the total came in at just under that? Or is there anything to be said for paying slightly over the optimum, in order to qualify for online filing incentives perhaps?

Cheers again, Tony.

[Sockpuppet]

Okay, I've been contracting for six months and finally have enough invoices paid to begin drawing a regular salary. Now I gather £5,225 is the most tax efficient amount to draw this year and still meet the minimum National Insurance contributions required to get a pension. However, given that we're in month 4 already, can I now take 5225/9 = £580 for each of the remaining months and still meet the NI criteria, or will the fact that NI is worked out on a weekly basis mean this won't get me enough NI to make a qualifying year?

Thanks, Tony.

If you're a director NI is worked out per year on a cumulative basis.

So yes take £580 per month.

[chubba]

Can't you back-date PAYE?

[ittony]

Okay, I've been contracting for six months and finally have enough invoices paid to begin drawing a regular salary. Now I gather £5,225 is the most tax efficient amount to draw this year and still meet the minimum National Insurance contributions required to get a pension. However, given that we're in month 4 already, can I now take 5225/9 = £580 for each of the remaining months and still meet the NI criteria, or will the fact that NI is worked out on a weekly basis mean this won't get me enough NI to make a qualifying year?

Thanks, Tony.