Small Ltd with 2 direcors and pension contributions

[JTro]

Hi! Just wonder if someone can explain in simple terms if we should be registered for pension contributions or not. A limited company with 2 directors (DH and me) doing some consultancy work. No other empoyees. We both are doing the job. We both get salary each month (not a lot). We don't have job contracts, we just do our work, that's it. Right now things are not looking good in terms of amount of work, so probable company would not last long. We've got a letter from TPR about registering for pension scheme. In this situation would we be exempt from the scheme?

If you have no employees, including yourselves, then you’re exempt. TPR will have written automatically

Are we considered as employees if we get salaries? We are 2 Directors (owners) who do all work. So we get contract for consultancy, we do the work, we get salaries.

If you get a salary (paye) you need to be offering yourself a pension eg through Nest

Yes, we pay ourselves salaries through paye. So it's obligatory to be registered for pension?

Just to add - We don't have employment contracts with ourselves (our Ltd company). If we get paid through paye does it make us employees of our company?

Compulsory pensions came in a few years ago. You have to opt out if you don't want one otherwise the employer has to make deductions from your salary and make payments into your pension. NEST is the government scheme I think. When I did payroll for our business before we sold it the payroll software made sure we were compliant with the pensions part plus it dealt with the electronic submissions which had also become a requirement.

I know about compulsory pensions if the company have employees. In our situation we (me and my husband) are the only 2 Directors of our Ltd company with no other people working in this company. We get our salaries through paye, but we don't have employment contracts (working hours, sick pays, responsibilities, etc). We do work when needed (whenand if we get a contract).

I didn’t think a salary was enough to make you eligible, there has to be an employment contract. But if that’s not right or up for debate then you need someone else to advise I’m afraid!

You need to talk to a qualified tax accountant and take their advice. At the moment, it appears that you both seem to be the Ltd Company's shareholders, its directors and the only employees all at once. Aside from the pension aspect, you may well not be organising your finances in the most tax-efficient way.

I'm fairly certain (and I am an accountant) that if you don't have an employment contract (which is permissible for owner directors) then there will be a way for you to declare that you are exempt from Auto enrolment.

Any regular paid employees, even if called directors, would have to be in.

You can telephone the pension regulator for help

This is the problem with somewhere like MN. A lot of people have some knowledge but not complete knowledge and muddy the waters.

You are exempt as you are officers of the company (directors) without employment contracts. See link below as to how to tell TPR this. Please read around the FAQ rather than take my advice as gospel.

www.thepensionsregulator.gov.uk/en/employers/what-if-i-dont-have-any-staff

not-employer.ae.tpr.gov.uk/

@CharteredBeanCounter nails it

I read that FAQ from top to bottom:) And I'm probably stupid as still confused:) We both(directors) get paid every month through paye. What TPR means under "employment contracts"? Is getting our salaries every month through paye make us employees and having employment contracts (verbal)?

As an accountant, coud you tell what means "employment contract" for TPR?

In an owner managed business you don't need to have a written employment contract.

Some businesses where the directors are not also family would choose to have a contract for services instead.

So it looks like we are exempt from auto-enrolment?

Hmm

• ”your organisation or business has a number of directors, none of whom has an employment contract, with no other staff”

I see why you are confused OP! I would call them…they are not going to be “after” you.

i hope the company makes more money soon