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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3829
Experience:  FCCA FCMA CGMA ACIS
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I have been taking drawings from business but I have not processed

Customer Question

I have been taking drawings from business but I have not processed PAYE just transferred the money, can I back date PAYE for the year?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

Are your drawings below the Lower Income Limit for National Insurance [GBP 111 per week]. If this is the case then you do not need to use RTI providing your orgabisation is awatre of the fact that you have no other job. Here is the advice from Accounting Web [edited]:

'If the company has no employees above the LEL in any week, and you have a declaration from them that this is their only job, then you don't need a PAYE scheme.

Are you referring to self employment or as a diretctor of a limited company who must be remunerated through PAYE. Even in this case the advice still applies.

I do hope this reply has been of assistance.

Customer: replied 2 years ago.

earnings are above the minimum

Expert:  bigduckontax replied 2 years ago.
And you are not self employed?
Customer: replied 2 years ago.

no

Expert:  bigduckontax replied 2 years ago.

Gov UK web site explains it in detail here:

https://www.gov.uk/payroll-errors

In general terms you just work through the months inserting the correct data, a bit laborious, but needs must.

I do hope I have assisted you with your query. You will have to sit down and work out what you have drawn over the tax year and then make the appropriate entries and settle the sums owning for tax and NI with HMRC.

Customer: replied 2 years ago.

just so I understand fully - I can set up PAYE for myself with a start date of march last year and then go in and put my amount of drawings in and pay any tax ni I owe?

Expert:  bigduckontax replied 2 years ago.

Yes, set up RTI with HMRC and work through the problem. You could put everything in in one chunk, but that would seriously distort the PAYE system which is designed to make you tax neutral by the year end. A very large payment would skew NI thoroughly and the system would assume massive payments per month until the year end leaving you probably overpaying tax and underpaying NI.

Under what sort of umbrella is your business set up?

Customer: replied 2 years ago.

a limited company - if I put the lump through this month being the end of the tax year would that not make it correct as there have been no earnings previously in the year?

Expert:  bigduckontax replied 2 years ago.
It would be correct as it would atually reflect reality. Remember there are two more reproting months to go in PAYE terms, February/March [11] and March/April [12] so the skew I mentioned will still kick in and the system will be confused when lower drawings are reported in the last two months.
Customer: replied 2 years ago.

ok last point, would it best to wait until the last period to put the years drawings through or try and correct it now over the next couple of periods?

Expert:  bigduckontax replied 2 years ago.

I would suggest that the quicker you get going the better. PAYE likes a steady flow of emoluments throughout the year.

bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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