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bigduckontax, Accountant
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Can you show me a quick example of directors pay and ni say

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Can you show me a quick example of directors pay and ni say if they get paid £2000 a month in there salary and then a 10000 dividend this will be for next tax year so include the new dividend first £5000. I am interested in the Ni for directors because apparently this is different but I can't see how ? Will they also need to opt into thepension scheme as the are employees ?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I am as equally confused with NI for directors! I agree with you that when all the chips are down the answer is a lemon. However for directors. contributions are worked out from their annual earnings rather than from what they earn in each pay period. This is the reason for the different method. Whenever I have paid directors I have always used the normal PAYE process and HMRC have never batted an eyelid! In fact, in this case as the payments are regular at 2K a month the PAYE tables will work and give you the correct deductions to make. Here is the Gov UK guidance for directors on regular emoluments: 'This method is common for directors who are paid regularly. Each time you pay a director, work out their National Insurance only on their pay for that period, including bonuses.' The dividend does not come into the NI computation. Dividends in 16/17 et seq will be taxed as follows [source JF Financial; Accountants]: 'Your first £5,000 of dividends will be tax free. Any dividends above that but still in the basic tax band (up to £43,000 for 16/17) will be charged at 7.5% and any dividends in the higher tax band will be charged at 32.5% (also additional rates apply at the upper rate of tax).' Your employer will not know your personal tax position [I do appreciate that in this instance they well might] so will deduct tax at 7.5% and it will all come out in the wash when you self assess at the conclusion of each tax year. In most organizations there is automatic enrollment in the pension fund and an individual must opt out if he so wishes. If the director elects to opt in then everyone will know where they stand with no necessity to make assumptions. I do hope that I have been able to shed some light on your conundrum.
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Customer: replied 2 years ago.
Thank you Keith I appreciate the house honesty as when I read the HMRC literature I seriously wonder if anyone else get this but there you go ! Love keeping up with all the changes too.
I guess you are right if I just go ahead and do what I needed to paye then I should be able to see at the end of the year the difference not great when trying to explain to people !

I always used PAYE for directors and the normal monthly basis and there was never any adjustment needed at the end of the year.

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Thank you fro your support.