Directors' National Insurance (again!)

Rozzi Rainbow

I HATE directors' National Insurance :mad2:

I remember I had loads of problems with this last year, which eventually got sorted, but this year I have a slightly different issue, perhaps some who understands all this can help?

Our client was a director of a Ltd for the whole of the tax year, however only registered for PAYE in July 2011. So we proceseed the salary of £589 per month for the remaining 9 months of the year. As usual in the March payment, the NI reassessed itself on the annual basis. What has happened is that as her earnings for the 9 months (£5,301) are below the LEL for the year (£5304 - ouch, only just!) it has reduced her "Earnings at the LEL" down to zero. So my understanding is that when I file her return, her NI record won't be credited with anything for this tax year?

My issue last year was it was doing this for directors who had started up a Ltd part way through the tax year, and this got sorted as their annual LEL could be pro rata'd (I never know how you're supposed to write that, lol) for the time they were a director. However, this doesn't apply to this client as she was a director for the whole of the tax year, just not taking a salary. (Not sure why this happened and we didn't backdate the salary to April, don't think we realised it would cause problems.)

I think this is all ok and it's doing what it's supposed to, but would be pleased if someone who understands this could confirm either way. Thank you :001_smile: