PAYE as a contractor PAYE as a contractor
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  1. #1

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    Default PAYE as a contractor

    Hi all, hopefully someone will be able to provide some clarification please.

    So i run my own limited company working as an IT contractor. I have no employees and am a single director.

    Recently I've received a letter from HMRC to make paye payment electronically. I pay my taxes through self assesment and my monthly salary is below the NI threshold, so that means I do not need to submit any payments. Do I still need to declare anything to HMRC? I have called them but everyone is hopeless, they keep passing me from department to department.

    Doing some research online I found that PAYE payments are only if you have employees and if you pay over £162 a week or £702 a month. Now as I fall below that, do I just ignore the letter from HMRC or do I still need to register as an employer and submit that i have nothing to pay via EPS?

    I am trying to avoid registering for PAYE as thats another thing I have to look after and would like to avoid it if at all possible.

    Thanks.

  2. #2

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    If your monthly salary is £702 or less per month for this current tax year, no NI should be due at this level.

    I have had a lot of clients recently which have all had the same letter from HMRC. This was just a reminder letter and no further action necessary. It is two pages and on the back, has a table of the deadline dates and references for making payments, if you have PAYE due.

    If however HMRC have sent you a letter with a specific amount that they believe your company owes them for PAYE, this could instead be for specified charges if you have any outstanding RTI submissions due.

    HTH.
    We're all ears!

  3. #3

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    Quote Originally Posted by Louisa@AardvarkAccounting View Post
    If your monthly salary is £702 or less per month for this current tax year, no NI should be due at this level.

    I have had a lot of clients recently which have all had the same letter from HMRC. This was just a reminder letter and no further action is necessary. It is two pages and on the back, has a table of the deadline dates and references for making payments, if you have PAYE due.

    If however HMRC have sent you a letter with a specific amount that they believe your company owes them for PAYE, this could instead be for specified charges if you have any outstanding RTI submissions due.

    HTH.
    Yep thats exactly what I got. Thank you for confirming. Can relax now, was worried that I may have missed some payments or something.

  4. #4

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    I had the RTI submissions tool on my PC at home for a while and had to do a nil return each month. I think it worked twice, I gave up after that. I would get the odd letter every now and again telling me that I owed some random amount for PAYE (I don't know how they worked it out). I would phone and explain that I'm under the threshold and nothing is owed. it would be cleared and I was told that the RTI submission tool was no longer needed for nil returns. 3 months later, I would get another letter.... and repeat.

    Haven't had one for around 6 months so hopefully it's sorted now.

  5. #5

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    Quote Originally Posted by alex2900512 View Post
    Yep thats exactly what I got. Thank you for confirming. Can relax now, was worried that I may have missed some payments or something.
    Do you have an accountant?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  6. #6

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    Quote Originally Posted by northernladuk View Post
    Do you have an accountant?
    I did but i got rid of them, becuase i feel like im over paying for what i need. I dont have payroll, no expenses or anything. Instead i use a service where I submit my documents and invoices and so on, they add it all up and tell me what I owe.

    I am trying to get the hang of it all to do it myself too, but dont feel confident enough yet.

  7. #7

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    Quote Originally Posted by alex2900512 View Post
    I did but i got rid of them, becuase i feel like im over paying for what i need. I dont have payroll, no expenses or anything. Instead i use a service where I submit my documents and invoices and so on, they add it all up and tell me what I owe.

    I am trying to get the hang of it all to do it myself too, but dont feel confident enough yet.
    90 quid a month for an accountant and Freeagent is a no brainer. I can't see how that is overpaying for anything. You might find out everything you need to know but don't know. What about what you don't know you don't know?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  8. #8

    Fingers like lightning


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    Quote Originally Posted by alex2900512 View Post
    Hi all, hopefully someone will be able to provide some clarification please.

    So i run my own limited company working as an IT contractor. I have no employees and am a single director.

    Recently I've received a letter from HMRC to make paye payment electronically. I pay my taxes through self assesment and my monthly salary is below the NI threshold, so that means I do not need to submit any payments. Do I still need to declare anything to HMRC? I have called them but everyone is hopeless, they keep passing me from department to department.

    Doing some research online I found that PAYE payments are only if you have employees and if you pay over £162 a week or £702 a month. Now as I fall below that, do I just ignore the letter from HMRC or do I still need to register as an employer and submit that i have nothing to pay via EPS?

    I am trying to avoid registering for PAYE as thats another thing I have to look after and would like to avoid it if at all possible.

    Thanks.
    Don't think you've been answered fully here or that the right questions have been asked back. Firstly, if you have no PAYE to pay to HMRC, ignore the letter. They must have killed a thousand trees sending out these letters which can be found on the T'internet.

    From what you've said, there are no employees which to me indicates that you don't even take a salary. That being the case, you'll need to file an EPS each month. You're an IT contractor and currently still are one I assume? How do you remunerate yourself? All divi's or £700 per month salary plus divi's? If it's £700 per month salary plus divi's and you have a normal tax code with a full personal allowance, then there's still no PAYE to pay so you can still ignore the letter but you will be filing an FPS to HMRC each month rather than an EPS.

    If you're just paying a divi to yourself and no salary, I'd perhaps seek professional tax advice on perhaps considering taking some form of wage for a couple of reasons. If you're not drawing any money out of the company because you have other income from elsewhere, fair play.

    However, the one thing to take away from your post to most is that this letter from HMRC is a automatic computer generated letter advising what reference numbers to use when making a PAYE payment to them. Nothing to be worried about.

  9. #9

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    Quote Originally Posted by alex2900512 View Post
    I am trying to avoid registering for PAYE as thats another thing I have to look after and would like to avoid it if at all possible.
    If the letter that you have is the same as the one I'm thinking (titled 'Paying PAYE electronically') then, to have received this letter, you must have registered for PAYE at some point in the past as these letters are only going to PAYE registered businesses - there will be an 'Accounts office reference' on there which is allocated to PAYE registered businesses (as well as a PAYE reference, not shown on this letter).

    If you are PAYE registered then you will either need to make FPS or EPS submissions, depending on whether a salary has been paid or not.

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