Have Tax Questions? Ask a Tax Expert for Answers ASAP
Are you self employed?
As a director you may only be remunerated through PAYE channels with Income Tax (IT) and national Insurance (NI) deductions made. Business expenses, which would include these imposts, would be passed through the trading account of the company and reduce the exposure to Corporation Tax (CT).
Correct, they would be set against the CT computation.
As for the remuneration, correct, but the gross amount paid and the employer's share of NI would be a business expense.
Tax on the reduced sum, correct.
If challenged, yes, but most unlikely. Having said that, on a VAT inspection once I was asked to provide the supporting voucher for 13p, yes, thirteen pence, of input tax reclaimed.
Yes, of course.
A limited company paying a wage has to pay an employer's NI contribution, that added to the gross wage offsets CT.
The company deducts the employee's NI contributions and pays them to HMRC; in addition it also pays the employer's element of the contributions.
So what; NI is a separate taxation system from Corporation Tax (CT) or Income Tax(IT).
No, the company pays employer's NI contributions, employees NI is deducted from emoluments paid to them. The employee pays both IT and NI deducted from their emoluments.
The company does not pay CT every nine months, but every 12.
Employees NI is deducted from their emoluments.
The company does pass the IT deducted from the employees emoluments to HRC.
The employer also passes the employer's element of NI to HMRC.