new company director - exempt from deductions initially?

[EmEd1984]

a company director i know has been whinging about some higher tax bracket he has recently been put into that means he is �160 down more a month than he used to be. he's been a director for perhaps 8 months, and he says it's only happened in the last couple. he's kicking off saying he should be paid that in addition each month to compensate for it (the stupid fella hasn't obviously figured that he'll get taxed the same amount on an additional �160 in his wages...) but i've heard from more than one person that a 'new' director doesn't get charged either national insurance or tax (i'm not sure which) for a certain period of time, possible a year, but obviosuly he's not said a bean about that!! i can't find anything online to confirm my suspicions...he's doing my swede in making out he was better off as a manager, and he's 'so badly done to' and yada yada yada! he says he's even gone to the accountant to ask for more money, but i don't think the accountants aware of this exempt period either to pull him about it.

has anyone esle ever heard this?

tia x

[cassa333]

Tell him tuff luck. The rest of us can't get extra pay to cover tax and insurance.

[redcrx]

OK Im a director and usually at the beginning of the tax year my deductions are low compared to the end of the year. It works out the same over the year as if i was paid a standard non directors salary though

[buildersmate]

It's rubbish. There is no difference between the income tax and NI paid by a director, and other other mere mortal.
Directors of companies ARE employees - there is no difference in this aspect.
There is a long standing HMRC order related to expenses paid to employees who earn less than �8500 per year, and what they can be paid in expenses without it being counted as a taxable perk. This rule however does not relate to directors, who were always excluded. This order is over 20 years old and relates to a time when a salary of �8500 pa was quite a lot. It's irrelevant now because virtually everyone earns more than this amount per year. That is the only difference between rules for directors / others, that I can think of.

[factor-fiction]

Is he a director of his own company/partnership or just a direcor for a medium size/large business. ? If he works for a company he will be taxed on thesame basis as someone who isn't a director. The taxman doesn't care what your job title is. The title director can cover any slary range from �800pa to �millions pa

[moomintroll1]

There is definitely no exemption period for new directors. You have to pay tax on your earnings like everyone else, either by PAYE if you draw a salary, or through a tax return.

National Insurance is calculated slightly differently for company directors, because they are sometimes payed irregularly, but as redcrx says, it usually works itself out by the end of the year. This is just for "true" company directors, though, which is to say officers of the company registered at Companies House. Managers who have just been given the title "Director" as part of a promotion aren't really directors and aren't classed as such for NI.

He needs to speak to his accountant to find out why he is worse off now, instead of just moaning about it - that's what he pays the accountant for.