The need to register with HMRC for PAYE will depend on two key points – how much you take from the business as a salary and whether you take any additional benefits, such as a company car or health insurance.
Many directors choose to pay themselves via a combination of salary and dividends. It is possible to draw a salary of up to £8,840 (for the tax year ending 5 April 2022) without paying any tax and National Insurance. It should be noted that these allowances tend to change every year.
Once you register with HMRC for PAYE, you will be required to keep comprehensive records of salary paid and deductions – online accounting software, such as Xero can make this much easier.
Jacqui Reeves is a senior payroll manager at accountants Hillier Hopkins
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