Directors

Directors

APPOINTING NEW DIRECTORS

Every limited company must have at least one director. If a limited company has only one director, that director must be an actual person - as opposed to another company. A public limited company (or plc) must have at least two directors.

In general, it's up to shareholders to appoint whom they want as director. But there are restrictions on candidates, namely:

• they must not have been disqualified by a court from being a director - if they have, court   permission is needed                 
• they must not be an undischarged bankrupt - if they are, court permission is needed
• they must not be under the age of 16

The appointment of directors must also comply with the company's Articles of Association. These set out rules for how the company is to be run. They may include:

• how many directors there should be
• how long they can serve
• what happens at the end of their term

For example, in many companies directors are required to retire after a set term - eg three years. They can offer themselves for re-election at the shareholders' annual general meeting.

A director may be involved in day-to-day management, but doesn't have to be. These non-executive directors still have the same legal responsibilities as other directors.

You must tell Companies House within 14 days when:

• you appoint a new director - using either form AP01 or AP02
• someone stops being a director - using form TM01
• there's a change in a director's details - name or address, for instance - using form CH01 or CH02

Directors NIC

By default the payroll system will automatically apply the Annual basis for NIC calculation for Directors, as this is the prefer method of collection by HMRC. The pro-rata version is only recommended when a Directors periodic salary will consistently exceed the weekly/monthly UEL in each weekly/monthly pay period AND ONLY where the Director will be paid for the entire tax year as a Director.

This means the Director will not start to Pay NIC until the reach the PT (primary threshold) of £7,225. For more information on Directors NICs and the alternate way to calculate NICs for directors, please see the Directors NIC help file.

SETTING THE EMPLOYEE AS A DIRECTOR 

To set the Employee as a Director click Employee > Tax / NIC’s > Employee is / was a director during the tax year

1)  Select the Employee
      Select the employee in question from the employee menu.

2)  Tax/ NICs
      Once the Employee has been selected, click on the Tax/ NICs tab

3)  Directors
      Under the National insurance section, tick the box for Director if the employee is /was a director during
      the current tax year.

4)  Start / End of Directorship
      If the director starts/ end their directorship during the tax year click the Choose button to select the
      start / end date of the directorship.

5)  Save Changes
      Once ticked, click the save changes button. The employee is now set up as a director.
      To set up using the Pro-rata/ alternate method of calculating NICs see Directors NICs for more information.