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Directors Pay (UK Payroll)

This guide explains how to set up a director in payroll, choose the correct NIC calculation method, and ensure accurate reporting to HMRC.

Updated over a month ago

Directors Pay

Directors have different NIC rules than standard employees. Once marked as a director in payroll, their NICs will be calculated using HMRC’s director-specific rules, which take into account:

  • The date of their appointment as a director

  • The chosen NIC calculation method

This ensures NICs are correctly calculated over the tax year and reflected in official submissions and reports.


Set Up a Director

To set up a director:

  1. Go to: Staff > Employee > Payroll > Tax Information

  2. Enable Director Status: Tick the checkbox “Yes”

  3. Enter Directorship Start Date:
    Add the official date the employee became a director.

  4. Tick the checkbox for:
    “Use alternative method for calculating directors' NICs” if you want to use the alternative method, which calculates NICs on a per earnings period basis (e.g. weekly or monthly), just like regular employees.

  5. Click 'Save' to save changes


Directors Pay on Payslips and Reports

Once a director is set up:

  • Payslips:
    NICs will be calculated using the director’s selected method and shown clearly in the deductions section.

  • P60s:
    Year-end totals will reflect correct NIC for directors.

  • FPS submissions:
    The director’s NIC information will be submitted to HMRC accurately, based on their status and method.


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