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DaveLaser
Sep 28, 2023 3:20 PM UTC
Solved

Zero Salary Director

Hi - small company here and winding down (retiring)  I have 2 directors (me +wife) 2nd director still takes dividends but no salary - how do I remove her from Payroll and not mess up HMRC?

JessT
JessTAnswer
Oct 1, 2023 7:31 PM UTC

Thanks - so even though we will not pay her and so not need to pay tax and NICS (as I said we are retiring and running the company down) I still need to keep her on Payroll to keep her as a Director (Dividends < £2k)?


Thank you for your reply, Dave.

 

I understand that your wife is also retiring. However, she needs to stay on payroll to keep her as a director. I would recommend reaching out to your tax agency about this, and then let us know if they have instructions about her status.

 

You can also reach out to our dedicated payroll support so they can check this for you. They are available during the usual business hours in the UK.

 

  1. Click on the Help and choose the Search bar.
  2. Choose Contact Us at the bottom.
  3. Enter a summary of your concern and click Continue.
  4. Choose Start a chat.

 

Feel free to reach back out if you have any other concerns. Take care and have a good one.

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5 replies

Ashleigh1
Sep 28, 2023 4:58 PM UTC

Hello DaveLaser, thanks for posting on the Community page, in order to help you with your query, can we ask which payroll it is you are using in your account is it our Standard payroll or our Advanced payroll? 

DaveLaserAuthor
Sep 30, 2023 2:36 PM UTC

Hi - thanks, it is standard (online).

Dave

QueenC
Sep 30, 2023 6:32 PM UTC

Thanks for your active engagement and for providing follow-up information about your scenario, Dave. Allow me to assist you further and guide you through removing a director in QuickBooks Online Payroll without affecting HMRC.

 

The individuals who hold positions as directors within a company are considered employees, and the money they earn is liable to National Insurance Contributions (NIC). They are required to pay NIC on their salary and bonuses that exceed a specific threshold, which is determined by their yearly earnings rather than their monthly or weekly wages.

 

If you need to remove one, the process is the same as you would for a regular employee leaver. And I'd be glad to show you how:

 

To ensure accurate recording of tax and NIC in QuickBooks Online Standard Payroll, it is important to have a prepared P45 form. This form should be given to the employee, and it helps in notifying HMRC about the employee's final payment. By deleting the Director's NIC calculation method entry in the FPS (Full Payment Submission), you can inform HMRC that the employee is no longer a director. Additionally, any outstanding National Insurance owed by the director should be deducted from their final payment.

 

If the director is staying on as a regular employee:

 

  1. Go to the Employees or Payroll menu.
  2. Select the employee.
  3. In the Tax Information section, choose No for Company Director.

 

The employee will continue to pay NI as a director until the end of the current tax year.

 

Moreover, I have attached an article that will assist you in efficiently carrying out payroll runs and ensuring compliance with HMRC regulations. This can be achieved by utilizing the "To Do" list available on your Standard Payroll dashboard, which helps you stay organized and up-to-date: Standard Payroll hub in QuickBooks Online.

 

If you have any additional inquiries or require further support in managing your employees or directors, please feel free to reach out to the Community team. We are dedicated to assisting you throughout the entire process. Your business is important to us, and we are committed to ensuring a smooth experience as you continue to utilize our Online Payroll service. Have a wonderful day!

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