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Yin Bros
May 31, 2022
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Director salary below threshold but payroll run deducts NI EE

  • May 31, 2022
  • 2 replies
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Hi, I pay director salary £950 per month (annual £11,400) which is lower than the 22/23 NI primary threshold for directors, that is £11,908. Why is there NI EE deduction of £16.83 from the payroll run?

Best answer by DivinaMercy_N

The trouble ends here, @Yin Bros. I'm here to ensure you'll be able to correct your payroll.

 

Allow me to discuss some details about the calculation of the deductions. This depends on how you set them up in your QuickBooks Online (QBO) account.

 

To resolve this, I suggest checking the set up in your account. If confirmed that everything is correct and the calculation is not, you can use the HMRC calculator. On the other hand, if you don't want taxes to be calculated, you can add them as earnings or additional pay types.

 

I also recommend reaching out to an accountant to help you verify the setup based on your payroll preferences. If you're not affiliated with one, utilize our Find an Accountant tool to look for one near you. 

 

I've also added these articles for additional guides in identifying pay types: 

 

 

QBO offers a lot of awesome reports that you can access, export, print, and customise. This is divided based on the different categories. To get started, please visit this page: QBO reports. 

 

Feel free to drop a reply if you have questions about the information above. I'd like to clarify things to ensure your success. Take care always. 

2 replies

DivinaMercy_N
DivinaMercy_NAnswer
June 1, 2022

The trouble ends here, @Yin Bros. I'm here to ensure you'll be able to correct your payroll.

 

Allow me to discuss some details about the calculation of the deductions. This depends on how you set them up in your QuickBooks Online (QBO) account.

 

To resolve this, I suggest checking the set up in your account. If confirmed that everything is correct and the calculation is not, you can use the HMRC calculator. On the other hand, if you don't want taxes to be calculated, you can add them as earnings or additional pay types.

 

I also recommend reaching out to an accountant to help you verify the setup based on your payroll preferences. If you're not affiliated with one, utilize our Find an Accountant tool to look for one near you. 

 

I've also added these articles for additional guides in identifying pay types: 

 

 

QBO offers a lot of awesome reports that you can access, export, print, and customise. This is divided based on the different categories. To get started, please visit this page: QBO reports. 

 

Feel free to drop a reply if you have questions about the information above. I'd like to clarify things to ensure your success. Take care always. 

    paul72
    paul72
    June 1, 2022

    Hi @Yin Bros 

     

    I don't know for sure (I don't use QBO Payroll) but I think the calculation is correct if you're running a Monthly Payroll.

    The NI thresholds are being altered on 6th July - Chancellor's Spring Statement 2022 - they are not uniform throughout the year:

    https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2022-to-2023#class-1-national-insurance-thresholds

     

    So, although the overall (annual) allowance is £11,908 this is not 12 x £992.33

    QBO is probably calculating as 3 x £823 & 9 x £1,048

    NI is non-cumulative (unlike PAYE) so there is no refund through the payroll in later months.

     

    This is how I'm expecting my payroll software to work for employees (I don't have to worry about directors but I don't see why a director should/would be treated differently).

     

    I think the only workaround would be to switch to an Annual payroll for the director which would save 3x£16.83

     

    Hope this helps.

      Y
      Yin BrosAuthor
      June 1, 2022

      Thank you. I switched to annual payroll and it works. 

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