Directors salary

Robj

Any advice please? New company in it's first year, director (only one) has not taken any salary, if £5000 is included as an expense in accounts and shown as an accrual or payment to directors loan account at YE, could it then be included on his SA return to use up personal allowance, even though it had not actuall been received?

Many thanks

deanshepherd

Not unless you want to deal with a late filed P35 and the £100 per month penalties that will be issued when you do file the return.

Robj

deanshepherd wrote: »

Not unless you want to deal with a late filed P35 and the £100 per month penalties that will be issued when you do file the return.

Thanks for the comment. I was under the impression - perhaps wrongly - that if salary is below the LEL there is no need to register as an employer??

deanshepherd

Ah yes, that is correct. £5k may be over the LEL depending on how far into the tax year the company was formed though. Couple of issues spring to mind:

- If it is an accrual then that will be processed through the current year's payroll so will not appear on the previous years tax return. Needs to be processed within 9 months of year end to attract corporation tax relief.

- If director is making the decision to pay a salary now then you shouldn't really backdate a directors loan account transaction. Either it existed at the time or it didn't. Of course if he always intended to pay himself a salary but is only now asking you to draw up the paperwork then that is a different situation..