If a director has taken a salary of 5000 from company, they havent had to register for paye etc as they below threshold for NIC etc, however in their self asssessment in would be declared as income from the company recieved in the capacity as a director, am i right? as the director was self employed for part year it couldnt just be shown as self employment income? a bookkeeping client who does their own accounts has asked and ive said it would be declared as salary as a director, and they asked why couldnt they show it as consultancy costs for work they have done and declare it as self employed income as they are registered as self employed, it confused me a little dont know why but im thinking if they are registered as self employed on the assessment it asks employment info etc so they can still declare it as salary recived from company.
Clarification would be great, been long day, maybe ill wake up with a less confused head.
All depends how it goes through the companys accounts.
The company can show as a salary even if not registered as employer.
If goes through as salary then would be employment income
If goes through consultancy costs would be self employment income though if shown as consultancy costs then director would need to issue the company with the appropriate invoices. (this would need to be a related party transaction if material
The company is small and the amount equals aprox 5% of the total income , however as a small company isnt there an exemption from reporting this in the notes, as a small company would need to disclose or consider the transaction to be disclosed if they didnt apply the FRSSE?
I appreciate materiality doesnt just depend on the amount however ive used that just to give a idea, overall income for the year was in the region of 40k
Not sure what you mean. The company would need to consider the disclosure either under FRSSE if it is small or under FRS 8 if doesnt apply FRSSE.
If applying the FRSSE i think the company only needs to disclose if material from its viewpoint whereas if applying the FRS the company needs to consider if material from either its own viewpoint or the related party.
but im thinking if they are registered as self employed on the assessment it asks employment info etc so they can still declare it as salary recived from company.
