Directors NI contribution

[205alive]

If a company director (with no other partners, staff etc) of a new company doesn't draw a salary in the first year, how much NI would they pay?

Is it possible to approximately estimate without needing to determine lots of additional variables, as I'd like to give just a rough estimate for the purposes of a P&L balance sheet to include in a business plan?

[Eric Mc]

205alive said:

If a company director (with no other partners, staff etc) of a new company doesn't draw a salary in the first year, how much NI would they pay?

Is it possible to approximately estimate without needing to determine lots of additional variables, as I'd like to give just a rough estimate for the purposes of a P&L balance sheet to include in a business plan?

If he draws no salary, or draws a salary below the NI threshold (currently £7,488) then no Employee's or no Employer's NI will be levied. The only mechanism to make contributions would be for the director to personally pay voluntary Class 3 contributions.

This type of contribution is personal and should not be paid by the company.

Alternatively, sufficient salary should be drawn to ensure NI contributions are payable.

[205alive]

OK, I'll go down the Class 3 route and leave NI details off this particular balance sheet.

Thanks once again, Eric.

[Eric Mc]

NI NEVER shows on the balance sheet (unless there is an element of unpaid NI at the year end date) when it would show up as part of the "Other Taxes and Social Security" creditors heading.

I presume you are using an accountant?

[Paul Dishman]

Eric Mc said:

205alive said:

If a company director (with no other partners, staff etc) of a new company doesn't draw a salary in the first year, how much NI would they pay?

Is it possible to approximately estimate without needing to determine lots of additional variables, as I'd like to give just a rough estimate for the purposes of a P&L balance sheet to include in a business plan?

If he draws no salary, or draws a salary below the NI threshold (currently £7,488) then no Employee's or no Employer's NI will be levied. The only mechanism to make contributions would be for the director to personally pay voluntary Class 3 contributions.

This type of contribution is personal and should not be paid by the company.

Alternatively, sufficient salary should be drawn to ensure NI contributions are payable.

Aren't NI credits made despite drawing less than £7488?

[sumo69]

Yes a full credit is given on your NI record so long as you have received a salary in the current 2012/13 tax year of £107/week or £5595 if pais in 1 lump.

David

[205alive]

Eric Mc said:

NI NEVER shows on the balance sheet (unless there is an element of unpaid NI at the year end date) when it would show up as part of the "Other Taxes and Social Security" creditors heading.

I presume you are using an accountant?

When I say balance sheet, what I'm really referring to is a profit, loss and cash flow forecast as included in a business plan, which is based on a template which includes a row labeled 'Directors Remuneration/NI'.

ETA, not using an accountant at this stage.

[205alive]

Paul, sumo69, thanks for additional info. May consider drawing some sort of small salary to benefit from NI credits.

[Eric Mc]

205alive said:

Eric Mc said:

NI NEVER shows on the balance sheet (unless there is an element of unpaid NI at the year end date) when it would show up as part of the "Other Taxes and Social Security" creditors heading.

I presume you are using an accountant?

When I say balance sheet, what I'm really referring to is a profit, loss and cash flow forecast as included in a business plan, which is based on a template which includes a row labeled 'Directors Remuneration/NI'.

ETA, not using an accountant at this stage.

Really the Profit and Loss account then rather than the Balance Sheet as such.

The NI shown in the Profit and Loss accounts usually reffers to the "Employer's Contribution" as that is a separate cost to the business over and above the Gross Salary.

[205alive]

Thanks for the further clarification, Eric, will keep this in mind for the future.