# Directors Fees and taxes



## eireog (20 Feb 2011)

As a director of my own limited company if I simply pay myself through directors fees, can I pay myself a gross amount and then pay taxes through 'self assessment' from this pot of money (that is at that stage sitting in my personal bank account)?


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## T McGibney (20 Feb 2011)

eireog said:


> As a director of my own limited company if I simply pay myself through directors fees, can I pay myself a gross amount and then pay taxes through 'self assessment' from this pot of money (that is at that stage sitting in my personal bank account)?



No, your company must operate PAYE.


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## ninak (7 Mar 2011)

Can anyone tell me why as directors we are not entitled to PAYE tax credit? I pay PAYE at the same rate as any normal PAYE worker and receive less than most in wages, yet because we are self employed and run a small company, we are not entitled to the PAYE tax credit. I don't understand this one?


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## Paddy199 (7 Mar 2011)

Why not get a friend to employ you in his company and vice versa! You will both save €1,830, or whatever it is now.


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## T McGibney (7 Mar 2011)

Paddy199 said:


> Why not get a friend to employ you in his company and vice versa! You will both save €1,830, or whatever it is now.



No, they won't.


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## NumbrCrunchr (8 Mar 2011)

Not getting a PAYE credit and not being entitled to Social welfare benefits are two major anomalies in our tax / prsi system that impact unfairly on self employed / proprietary directors and reduce the rate of entrepreneurship. 
On the plus side we avoid Employers PRSI which beats the PAYE credit at incomes of over €8250
I would exercise caution with having a cosy relationship with a friend to avail of the PAYE credit. Just because you say you are an employee and you file as such, an employment may not in fact exist as it must fulfill certain criteria. 
However there is nothing whatsoever wrong with taking an employment which does fulfill the criteria and there is opportunity there.

Regards
NumbrCruncher  
Regards
NumbrCrunchr


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## Paddy199 (8 Mar 2011)

Just make sure it fulfills the criteria and you will be fine. 

T McGibney, why do you say that you won't qualify for Class A and the PAYE credit when you are strickly an employee of the company?


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## T McGibney (8 Mar 2011)

Hi Paddy,

I don't think it would be possible to credibly defend a 'reciprocal employment' position in the event of a Revenue audit or query. 

Clawback of Prsi credit, and relevant employee credits would follow, pretty much automatically, together with interest/penalty charges on resulting underpayments.


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## Paddy199 (8 Mar 2011)

What makes you think its a reciprocal employment? And where is the link? 2 seperate employments, employment contracts, roles, responsibilities, duties, wage rates, etc. There is nothing at all to link the 2 employments. Once Revenue get their PAYE/PRSI they are satisfied.


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## T McGibney (8 Mar 2011)

Paddy199 said:


> What makes you think its a reciprocal employment?




...



Paddy199 said:


> Why not get a friend to employ you in his  company and vice versa! You will both save €1,830, or whatever it is  now.


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## Paddy199 (10 Mar 2011)

Obviously you don't state that in the employment agreement!


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## Dunlin3 (11 Mar 2011)

ninak said:


> Can anyone tell me why as directors we are not entitled to PAYE tax credit? I pay PAYE at the same rate as any normal PAYE worker and receive less than most in wages, yet because we are self employed and run a small company, we are not entitled to the PAYE tax credit. I don't understand this one?



The commission on taxation that reported almost eighteen months ago now recommended that this inequality be addressed. Perhaps if all small business owners lobby the new minister of finance then this might change. Won't hold my breath though!


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