Reply to: Salary level / NIC contributions

[psychocandy]

Anyway, I digress - thanks for the valuable discussions and explanations. I think that I am going to plump for the £10k figure as I don't anticipate needing SMP or SPP and also although I don't have a contract with my own company, neither do I do a 40 hour week on average, so I think £10k would cover NWM anyway.

Paul

As I pointed out, there is nothing concrete to suggest that payment of £10K precludes you from this anyway.

[northernladyuk]

I prefer the more personal option available via here

Just don't ask about Personal Services Companies unless you have a strong stomach.

[eek]

<pssst> Don't forget to tell him about the search option...

I prefer the more personal option available via here

[Paul WSS]

Thanks for all of the comments, and I'm glad that it's not just me that it opens up questions for!

I had tried searching, but hadn't found the threads linked to, so thanks very much for those. I am slightly annoyed that the professional that I am paying for advice doesn't seem to be able to provide reasonable explanations as to why they recommend one amount over another, and what the pros and cons of different amounts are. One of the reasons that I left my last accountant was that they gave me wrong advice and I had to go and search the HMRC employers manual to prove it to them! (That and they insisted on using a rather poor spreadsheet for the bookkeeping and I had to invent my own systems for invoicing and logging expenses. I'm now happily using Freeagent.)

Anyway, I digress - thanks for the valuable discussions and explanations. I think that I am going to plump for the £10k figure as I don't anticipate needing SMP or SPP and also although I don't have a contract with my own company, neither do I do a 40 hour week on average, so I think £10k would cover NWM anyway.

Thanks for all of the help, I can see myself being a regular visitor to this useful resource!

Paul

[psychocandy]

These should confirm that you don't have to pay NMW if you don't want to but might want to consider the £12K salary to entitle you to employee statutory payments.

It was administrator :-)

[Ticktock]

Appreciate there are differences of opinion amongst accountants as to what salary to pay and as to whether NMW is applicable.

However, I can see nothing that specifies that salary has to be £12K in order to claim these benefits. The two do not seem connected.

https://www.gov.uk/employers-paterni...ve/eligibility states £111/week.

Clare didn't say it was a necessity, simply that it was the safest position, and you might raise eybrows by claiming to be an employee when it benefits you, but not to be an employee when it would cost you.

[psychocandy]

Appreciate there are differences of opinion amongst accountants as to what salary to pay and as to whether NMW is applicable.

However, I can see nothing that specifies that salary has to be £12K in order to claim these benefits. The two do not seem connected.

https://www.gov.uk/employers-paterni...ve/eligibility states £111/week.

[Clare@InTouch]

Or don't claim SSP, SMP or SPP.

Exactly.

[Ticktock]

I've not seen it tested so it would depend on the HMRC Inspector. If you want to err on the side of caution though, considering the tax and NI implications will be minimal, then opt for NMW.

Or don't claim SSP, SMP or SPP.

[Clare@InTouch]

Shirley the argument is "I'm an employee, working for MyCo for 145 days a year (or whatever the sums work out at). The rest of the time I am engaged my MyCo, fulfilling my duties as a Director".

I've not seen it tested so it would depend on the HMRC Inspector. If you want to err on the side of caution though, considering the tax and NI implications will be minimal, then opt for NMW.

[psychocandy]

There's no check when you make a claim, so HMRC wouldn't know unless they looked into your PAYE records.

The link with NMW is that it applies to employees, and if you're claiming to be an employee for SPP purposes then you should be consistent.

Hmmm. Confused now. So are you saying that there is a difference between paying the necessary to get credited NI contributions and paying £12K (and associated NI)?

I.e. If you don;t pay 12K you're not entitled to these benefits. If so, does this include JSA. What about state pension?

I must admit I thought it was all a simple case of have you been credited with NI payments for the year, yes or no. Nothing to do with £12K or whatever.

[Ticktock]

There's no check when you make a claim, so HMRC wouldn't know unless they looked into your PAYE records.

The link with NMW is that it applies to employees, and if you're claiming to be an employee for SPP purposes then you should be consistent.

Shirley the argument is "I'm an employee, working for MyCo for 145 days a year (or whatever the sums work out at). The rest of the time I am engaged my MyCo, fulfilling my duties as a Director".

[Clare@InTouch]

Last year I claimed SPP with no problems. And my salary was £7488.

Not quite sure the connection between NMW though?

There's no check when you make a claim, so HMRC wouldn't know unless they looked into your PAYE records.

The link with NMW is that it applies to employees, and if you're claiming to be an employee for SPP purposes then you should be consistent.

[jamesbrown]

Why pay NI when you don't have to? I'd move accountants.

This is a complete overstatement. Accountants (as with any other professionals) vary with their opinions, and suggesting NMW is a valid opinion. It isn't a requirement, and you can dispute the significance w/r to increasing your risk of investigation (there is no evidence and little argument to suggest it would), but it is somewhat less aggressive than paying to the secondary NI threshold or making optimal use of the NI incentive, plus it's a requirement if you do have, or decide to put in place, a formal contract of employment and, arguably, if you claim employee benefits. As a business owner, you should be able to take advice and think for yourself without dumping the baby.

[psychocandy]

If you want to claim SSP, SMP or SPP then you must be an employee. If you're an employee then you could argue that NMW would apply......

There's no requirement to pay PAYE at all if you'd rather not, unless you're subject to IR35.

Last year I claimed SPP with no problems. And my salary was £7488.

Not quite sure the connection between NMW though?