National Insurance for company directors

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £12,570.

Contributions are worked out from their annual earnings rather than from what they earn in each pay period.

There are different rules for tax on dividends.

Companies also pay employer바카라 사이트™s National Insurance on directors바카라 사이트™ salaries. This applies even if you바카라 사이트™re the director of your own company running payroll and the only employee.

If you바카라 사이트™re running payroll

Use payroll software to work out the National Insurance due.

There are 2 different ways of doing this. You may be able to change your method during the tax year depending on your payroll software.

Standard annual earnings period method

This method is common for directors who are paid irregularly.

  1. Each time you pay a director, work out their National Insurance for their total pay over the tax year so far, including bonuses.

  2. To work out what contributions they now owe, take off the total employee National Insurance they바카라 사이트™ve paid so far this year.

Alternative method

This method is common for directors who are paid regularly.

  1. Each time you pay a director, work out their National Insurance only on their pay for that period, including bonuses.

  2. At the end of the tax year, use payroll software to work out whether more employee National Insurance is due and deduct it from their last payment.

What to report to HMRC

Report directors바카라 사이트™ pay and deductions in your Full Payment Submission (FPS).

Put one of the following into the 바카라 사이트˜Director바카라 사이트™s NIC calculation method바카라 사이트™ field on your FPS:

  • 바카라 사이트˜AN바카라 사이트™ if you바카라 사이트™re using the 바카라 사이트˜standard annual earnings period method바카라 사이트™
  • 바카라 사이트˜AL바카라 사이트™ for the 바카라 사이트˜alternative method바카라 사이트™

Fill in the 바카라 사이트˜Week of director바카라 사이트™s appointment바카라 사이트™ field.

When to pay

Contributions are calculated on annual earnings but they바카라 사이트™re still paid to HMRC after you run your usual payroll (for example, weekly, monthly or quarterly).

Category letter changes

The director might be due a National Insurance refund if their category letter changes (for example, because they reach State Pension age).

Use your payroll software to recalculate their National Insurance, either at the time of the change or the end of the tax year.

When an employee stops being a director

After you바카라 사이트™ve paid the employee for the last time, tell HMRC by deleting the 바카라 사이트˜Director바카라 사이트™s NIC calculation method바카라 사이트™ entry in the FPS.

Work out any National Insurance due using payroll software. Deduct any National Insurance the director owes from their last payment.

If the director is still your employee

Calculate their National Insurance based on their earnings for the whole of the tax year, as if they were still a director.

From the next tax year, calculate their National Insurance as an employee based on each pay period.

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