The options available to you may depend on what software you have.
There is an annual RTI scheme for companies where there is only a single payment run each year (possible for directorship companies). So if your payroll software supports annual pay interval you could file the entire "payment" as a single figure on 6th April, but credit it to DLA rather than paying the cash. Then the director can draw that down @£624/month, or quicker if they want to. In that situation, as long as you've told HMRC that it is an annual scheme, there is nothing more to file for the rest of the year.
If the PAYE interval is monthly payroll then you'll need to file 12 times a year, once each month.
I think if it is I would however still be prone to running two payrolls. one for 11 months and one at the end of the year for the final month in case the last payment needs to be adjusted.
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.
I bet that the annual scenario for companies messes up Universal Credits for those directors in receipt of such though.
__________________
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.
I think if it is I would however still be prone to running two payrolls. one for 11 months and one at the end of the year for the final month in case the last payment needs to be adjusted.
kind regards,
Shaun.
I'd only use my suggestion in very SOLID companies. You wouldn't want any risk that the director's personal allowance has been used up by a payment that he is unable to extract from the DLA of a bust Ltd.
I have just started using Payroo, and I think they can do an Annual pay period. If not, does 12 Pay have an annual accounting period ?
Will have to register as an annual scheme with HMRC, though.
Thanks for the advice, very helpful.
Eunice
12Pay supports annual PAYE frequency. You need our Bureau licence to gain access to it, which is £109.90+VAT/year for unlimited companies and unlimited employees.
We also support a Bureau RTI Robot which is particularly useful for bureaus/practices with a lot of "clockwork" directors monthly payrolls. Using the Robot you can file them all at once each month at the click of a button. (each payroll can be marked up as subject to the robotic operation, all other payrolls should still be filed manually)
I was told by my payroll bureau company that you couldnt do annual payments for sole director companies but instead you had to report each month?
Looks like I need to go back to them.
Regards
Mark
The payroll software needs to be capable of the annual pay frequency feature to take advantage of the HMRC concession, unless you're prepared to take a single annual payment in month 12, in which case a monthly pay frequency would generate the correct results. But most people don't want to wait for all their money until the PAYE year end.
They use SAGE so I expect it should be compliant with annual payment
Few questions
1. Do you need to process it in month 12? For instance if it a December year end it would be better to process it in month 9 to get the tax relief in December 2013 rather than month 12 when wouldnt get tax relief until December 2014.
2. Does the amount paid actually have to be paid. Cant you just credit it to the DLA and draw down as needed and sort out a the year end via annual payroll and dividends?
I have a number of clients who are just one man band directors paying themselves the minimum and taking rest as dividends. Whereas before just needed to submit return once a year been advised that we need to process the payroll monthly and thus do RTI each month and for this paper exercise the client will be charged £5 per month or £60 per year for no added value.
1. If running an annual pay frequency you can process it in whichever month suits you. I'm not sure if Sage handles annual pay frequencies. Most products don't. If payroll product can't handle annual frequency then single payment can only be in PAYE month 12. 2. Please see my suggestion about DLA earlier in this thread. Yes, crediting DLA is sufficient.
If you inform HMRC of an annual scheme you can file a single FPS annually, with no other entries, as long as your payroll software can handle it.
As said I just want to process one payroll run a year, probably at the year end (just a paperwork exercise as the amount wont be paid just credited to DLA). Though if SAGE cant handle annual schemes then defeats the purpose as will need to submit 11 nil EPS which is not what I want as bureau company is charging £5 per submission where there is anything to declare or not. So in the clients eyes they are now pay £60 for no added value which is difficult to justify to pay onto them.
You would think that SAGE would be able to handle annual schemes are most small businesses are 1 man bands or husband/wife with no "proper" employees.
It was so much simpler with the old system.
Will speak to SAGE to find out if can use Annual Schemes before going back to payroll bureau.
The feedback I have had, from both HMRC and courses I have attended is that although you are able to submit annual schemes, in the case of single directors taking minimum salary + dividends, the best way to do it is to submit monthly payroll. You are able to submit in advance, but HMRC recommend no more that 5 months in advance. Its then the directors choice when he takes this money out of the bank, but still gives you the freedom to allocate monies to salary and expenses as before. Hope that helps.
Debbie
Did anyone give a reason for not recommending annual schemes, which reduce the 12 submissions (and therefore 12 opportunities for compliance failure) to 1, and are specifically permitted? A bit contradictory for HMRC to set up an annual scheme register and then go around recommending that people don't use it.
-- Edited by Tom McClelland on Thursday 28th of March 2013 08:20:15 AM
The feedback I have had, from both HMRC and courses I have attended is that although you are able to submit annual schemes, in the case of single directors taking minimum salary + dividends, the best way to do it is to submit monthly payroll. You are able to submit in advance, but HMRC recommend no more that 5 months in advance. Its then the directors choice when he takes this money out of the bank, but still gives you the freedom to allocate monies to salary and expenses as before. Hope that helps.
I have heard that HMRC will terminate an employees record if they do not receive a submission for 13 weeks. Therefore, if you are going down the annual route for directors would it be advisable that an inactivity report is filed for any month that the director is not paid?
From what I have read about annual schemes is that you need to register it with HMRC and let them know which month you will be making the submission. They therefore know which month you will make the submission and that the other 11 months not due to have a submission made so therefore they wont do anything about the 11 months as they know they will only get one each year and which month that should be.
Was going to call SAGE today to see if they supported it but was told was a queue of 30 mins so gave up. Looks like loads of others having RTI issuess.
I have Directors on sage that pay their salaries into the bank as and when they remember to. So it could be months before they remember to pay themselves.
As FPS needs to be submitted on or before the actual day they get paid, do I have to keep chasing the Directors to ask exactly when they intend to pay themselves? For all I know they could say to me that they will pay themselves on a set day each month but whether or not that actually happens how am I supposed to know? Do I just ask them to give me a set date and just ensure the FPS is submitted on or before and if they do miss a few months pay and catch up later will this affect anything?
So would I just ask the Director to give me a set day each month to submit the information and if they don't stick to that thats not my problem? Or do I have to set it as an irregular payment in the system somehow and keep chasing people to ask when they actually are going to pay themselves. Obviously with 70 different payrolls its going to be difficult to chase them all.
