Company Directors
Benefit reductions: •
annual business mileage
• • • less than 2,500 miles - full 35% charge 2,500 to 17,999 miles - 25% charge 18,000 or more miles - 15% charge COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS • unavailability - proportionate to the period during which the car was unavailable, expressed as a daily fraction of 365 • age of car - after adjustment for business mileage, a reduction of one third where the car was four or more years old at the end of the tax year in which it was made available. COMPANY DIRECTORS A company director is a person who holds the post of, or acts as, a director of a company within the terms, yet not necessarily the conditions, of the Companies Act 2006 (sections 250 and 251). In this capacity a company director is classed as an office holder and is liable for Class 1 NICs provided the earnings are chargeable to Income Tax. The business engaging the activities of a director is consequently laible to the secondary NI charge, often referred to as employers NIC. Section 251 refers to a “Shadow director” as being defined as a director for the purposes of the companies act. A shadow director is a person who is not a company director but who advises the board and whose advice and guidance is habitually acted upon by the board of directors. For the purposes of NICs a shadow director is treated in the same manner as a director. Contributions are normally (see below for alternative approach) assessed on an annual, or pro- rata annual, earnings period. A calculation should be made each time a payment of earnings is made, deducting payments already made during the tax year, to arrive at the balance due. All earnings are to be included, including fees and bonuses. When assessing liability, annual earnings limits and rate bands, or their pro-rata equivalents, should be used. It is common for directors to hold several directorships all attracting fees. In such cases contributions are paid in the main employment and the director can be granted deferment in the other employments, thereby only paying NICs at the 1% rate introduced in April 2003 and increased to 2% from April 2011. In order to operate deferment the business so affected must hold a copy of the director’s Deferment Certificate, CA2700, granted by HMRC. (See also Deferred Contributions.) From 6th April 1999 HMRC has operated alternative arrangements for the assessment and payment of NICs for company directors. The earnings period for a director remains annual; however, subject to the following qualifying conditions calculations of NICs may be made on account where: • the director agrees • the director normally receives earnings in a regular pattern and these earnings are above the LEL in each pay period. No printing, copying or reproduction permitted. N.B. Care must be taken when applying the alternative arrangement that, where a director commences or terminates employment during the tax year, earnings and contributions are re- assessed on the annual earnings basis. The business must have a notional ledger account into which payments of monies due to the
253
Made with FlippingBook - Online magazine maker