Reply to: Paying salary in one go

[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.

[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?

[psychocandy]

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

Contrib JSA only lasts 6 months fellas!

[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.

[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.

[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

[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.

[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?

[Craig at Nixon Williams]

The salary is spread over 12 months so as not to incur any NI or tax. You could have the whole amount due in month 1 but then you'd have an NI liability and a tax liability. I think there have been threads about this before and paying in arrears, so paying the whole lot in month 12 as you'd then have a whole year's worth of allowances to play with. It was also an RTI solution used by some people I believe.

Here you go...
http://forums.contractoruk.com/accou...-yearly-2.html

[Clare@InTouch]

Sure I read somewhere that salary does not have to paid in equal installments. Its just normally done this way.

The salary is spread over 12 months so as not to incur any NI or tax. You could have the whole amount due in month 1 but then you'd have an NI liability and a tax liability. I think there have been threads about this before and paying in arrears, so paying the whole lot in month 12 as you'd then have a whole year's worth of allowances to play with. It was also an RTI solution used by some people I believe.

[GazCol]

LOL. And I even posted in this thread. Which is why I remembered it!

I refer back to my post above!

[psychocandy]

Fill yer boots:

http://forums.contractoruk.com/accou...y-advance.html

LOL. And I even posted in this thread. Which is why I remembered it!

[jamesbrown]

Fill yer boots:

http://forums.contractoruk.com/accou...y-advance.html

[psychocandy]

Because it would create a loan to you as it's due in equal instalments over the whole year, with the associated benefit in kind and s455 implications of a loan over £5k.

When the loan limit increases to £10k you'd avoid the BIK, but the s455 still needs to be considered.

Sure I read somewhere that salary does not have to paid in equal installments. Its just normally done this way.

[GazCol]

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.

Is this a serious question?