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Sam
Sam, Accountant
Category: Tax
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Is there a requirement to deduct PAYE and NIC from bonus payments

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Is there a requirement to deduct PAYE and NIC from bonus payments to non resident directors in respect of days spent in the UK. Days spent are just at board meetings - around 8 days per annum. There is no regular remuneration in the uk except for the annual bonus.
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi
Thanks for your question
Then as long as you have the agreement from HMRC (In the guise of an NT - NO tax P6 notice of coding or equivalent ) then you can make this payment free of UK tax - but it HAS to be run through the payroll to apply the tax code allocated by HMRC
From what you seem to say - this may not have been put in place ? So you would need to remedy this as HMRC need to be aware of ALL directors for PAYE tax purposes when there are payments (even if just a bonus) unlike dividend payments
Thanks
Sam
Customer: replied 1 year ago.
Thanks Sam. In our case the bonuses have been accrued in the accounts for q couple of years but not paid out. Does that help?
Expert:  Sam replied 1 year ago.
Hi
Thanks for your response
Te same rules apply - its its a bonus (and it appears to be rather than dividends) then you will have to subject it to tax and NIC unless you have a coding notice detailing NT (No Tax) from HMRC
But each of the directors will be able to claim a tax refund on the basis they are not resident in the UK and the only attendance they made in the UK they have undertaking falls within the category of meetings (the other being training) and not WORK purposes
Thanks
Sam
Customer: replied 1 year ago.
There is no agreement. Are you saying we should account for the PAYE and NIC when the bonus is approved? (Isn't this different to a uk based director?) Thanks.
Expert:  Sam replied 1 year ago.
Hi
hanks for your response
Then you must apply PAYE against these bonus payments (and no the rules are no different for UK based directors although they do not have the ability to ask HMRC to consider a No Tax status against pay/emoluments, benefits OR pay!)
It will be up to each of the directors to whom this applies to make a repayment claim from HMRC.
The reason the rules are the same is because the income ARISES in the UK so unless you have HMRCs agreement (through the NT code) then you are legally obliged to operate PAYE against all income such as this regardless of whether the director or employee is situated.
Ideally each of the directors would have put this in place when they became directors, but it just means that the position will be a bit more long winded to claim back the tax after 05/04/2016
Do let me know if you require any further assistance with this -
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13776
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 1 year ago.

OK, , many thanks Sam.

Expert:  Sam replied 1 year ago.
Hi
You are very welcome
It would be appreciated if you would rate the level of service you feel I have provided you with today (or click accept)
Many thanks
Sam

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