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NIC and PO

16 June 2009
Issue: 4210 / Categories: Forum & Feedback , Income Tax
A sub-postmaster operates his business – a post office, bank agency and food store – through the format of a limited company. How should his personal salary from the Post Office be treated if this is paid into the limited company’s accounts?

A client runs a post office bank agency and food store from its single premises through his private limited company.

Apparently the Post Office will not transfer the post office agency into the name of the company so the postmaster is named on the monthly pay slips and Class 1 National Insurance contributions are deducted. The NT ‘no tax’ PAYE code number is applied.

I would very much welcome Taxation readers’ views on how the National Insurance contributions deduction should be accounted for in the business accounts.

For example should this be treated as a debit to the director’s loan account or an expense in the profit and loss account?

Query 17 419 – Posty

Reply from Scorpio

There are a few references to the treatment of sub-postmasters salaries for tax purposes within HMRC’s manuals.

The Business Income Manual at BIM66301 sets out the permitted...

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