another Ltd related scenario I'm facing and curious if anyone has come across this one.
A client of mine has been trading as Ltd for the best part of a year and took money out of the company whenever he wanted. The company is very profitable so I'm not worried about the payments not being covered by the profit available for distribution. However his accountant has suggested (only now!) that he should claim a part of this money as salary and the rest as dividends to minimise his tax bill.
My question is: isn't it too late to decide this now that we are almost at the end of the accounting year for the Ltd company? If the director wanted to pay himself a monthly salary shouldn't the company have produced monthly payslips and do all the (tedious) processes related to payroll? Or is it still in time to do it retrospectively for the year?
Is this scenario common with Ltds?
Thanks.
Fabs
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for a director there is no need to pay salary monthly. In fact annualised salaries for directors are quite common and there should be no issue with this.
The director should however have been sending in zero returns each month or quarter as a PAYE schem3e will need to have been set up for the company.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Need to make sure the company is registered for payroll.
Then just need to do annual amount for the director sufficient to avoid tax and NIC but to get benefit for payroll purposes. Amount for tax year 2011/12 is up £7,225.
Also need to complete the relevant P35 annual return and P60 for director.
Accountant could provide the service but why dont you and charge for it?
hi the same has just happened at the company where i work payroll with directors wages done as normal year end 31 october accountants gave a list of journals splitting directors wages and dividends everything has gone through ok guessed it had to be done before accounts were finalised and submitted and before the end of the fiscal year ?
