I am new to the forum, I am a self-employed book-keeper and was hoping someone could answer a quick question for me.
I have taken on the PAYE for a small limited company which was set up in May and have a situation I have not come across before. To date the directors have not paid themselves although I have recently received their P45's. Should I send their P45's off to HMRC with the start date of employment as 01/05/10 immediately or send them off when they start paying themselves?
I am not a PAYE expert, but I wonder if by not stating they are employees, it could affect their state pensions (ie. a gap in their NI record)? I would phone HMRC.
As they are not paying themselves wages then they are not employed by the business...they are directors who draw a dividend I'm guessing? If they are not going to be employed by the business there's no need to send their P45's.
I'd be inclined to ask the Directors if the intend to pay themselves a salary.
Drawing a dividend can cause problems if it was their only source of income. As Quentin posted they at least need to draw a salary at the LEL to qualify for state benefits.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
The Directors will be paying themselves a small salary from 01/01/11 so when I send off their P45's should I state employment started on 01/05/10 or 01/01/11?
Directors NI is calculated differently, it is done on their annual earnings can be paid either on the standard or alternative method (payments in advance).
As it is a new business are you aware there is a dedicated new employers phone number you can use for the 1st 3 years? If they have registered for PAYE then they should have been sent details.
