How much can you pay someone without NI/PAYE?
Discussion
Yes - if all of the employees are paid below the NI Lower Earnings Limit, then there will be no PAYE or NI to pay on the salaries they receive.
The figures for 2013/14 are £109 per week or £5,668 per annum
HOWEVER, there are lots of issues surrounding paying people ultra low wages -
Firstly, an employee may WANT to ensure that their earnings are high enough so that they either PAY some NI or at least have some NI credited to their record at the DWP. An employee needs to establish a contribution record at the DWP over a period of time to ensure they are entitled to their state pension when they reach pensionable age.
If an employee is paid between the Lower Earnings Limit (£109 per week) and the Primary Threshold (£149 per week) there will still be no NI payable on the salary, but their record at the DWP will be credited so they will not be losing out on their entitlement.
Obviously, in order for the employee to be able to be getting these "credits", the employer MUST be registered for PAYE/NI anyway and making the necessary weekly/monthly/annual returns - even if no physical tax or NI payments are being paid over.
Finally, apart from directors of their own limited companies, other employees are governed by National Minimum Wage regulations so you can't just pay people low wages for your own convenience - unless the only people being paid are directors of their own company.
The figures for 2013/14 are £109 per week or £5,668 per annum
HOWEVER, there are lots of issues surrounding paying people ultra low wages -
Firstly, an employee may WANT to ensure that their earnings are high enough so that they either PAY some NI or at least have some NI credited to their record at the DWP. An employee needs to establish a contribution record at the DWP over a period of time to ensure they are entitled to their state pension when they reach pensionable age.
If an employee is paid between the Lower Earnings Limit (£109 per week) and the Primary Threshold (£149 per week) there will still be no NI payable on the salary, but their record at the DWP will be credited so they will not be losing out on their entitlement.
Obviously, in order for the employee to be able to be getting these "credits", the employer MUST be registered for PAYE/NI anyway and making the necessary weekly/monthly/annual returns - even if no physical tax or NI payments are being paid over.
Finally, apart from directors of their own limited companies, other employees are governed by National Minimum Wage regulations so you can't just pay people low wages for your own convenience - unless the only people being paid are directors of their own company.
You can - but watch out for other aspects of Payments or Payments in Kind to Directors or Connected Persons that may need PAYE disclosure - especially as part of the Employer's End of Year filing.
PAYE is not only about wages and salaries.
You need to discuss this carefully with your accountant.
PAYE is not only about wages and salaries.
You need to discuss this carefully with your accountant.
Eric Mc said:
If an employee is paid between the Lower Earnings Limit (£109 per week) and the Primary Threshold (£149 per week) there will still be no NI payable on the salary, but their record at the DWP will be credited so they will not be losing out on their entitlement.
Hi Eric, can you explain a bit more about how the record is credited at DWP for between £109 and £149 a week?Are there any limitations on the credit that for example someone actually paying NI contributions would be entitled to but not those below £149 and therefore not paying NI?
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