Hopefully someone can answer this query as payroll isnt my area.
I understand the basic concept of RTI in that you have to submit the monthly return on or before when you pay employees.
But how do you treat the situation of a one man band limited company where the director is putting through an annual salary of circa £7.5k to use up their tax free allowance and get credit towards various benefits eg state pension and take the rest of income via dividends.
Do they physically have to pay themselves £7.5k ie write a cheque to themselves for the amount if you put it through in one month? In reality most people just take amounts as they need it and it is tidied up at the year end via adjustments through the directors loan account.
Or should they be writing a cheque for say £625 and make a declaration each month?
to date I've seen nothing to make me think that a director could not declare that they had paid themselves a set salary every month by crediting a monthly payment to the DLA.
Physically taking the money from the DLA can then be done as and when required without any further reporting and at the year end the final payment of th year would be an adjusting credit of the DLA.
If this is wrong I hope someone tells me so. I've not instructed anyone to adopt this approach yet but can see no reason that ot should not work in this way which is not that dissimilar to the existing system apart from telling HMRC that money is actually being taken more regularly than it really is just in order to keep everyone happy.
kind regards,
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.
Hi, that's what we do. Run a monthly payroll for £624, put it in the DLA (apart from a few who do actually have a standing order set up for that amount) and then they draw out of the DLA as and when. Currently we do a nil return to HRMC so they don't chase for unpaid PAYE liabilities, under RTI we will just do the monthly FPS instead.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
