Director payroll services in London

A company director needs to be included in payroll if they receive salary or other taxable earnings from the company. Directors are treated as employees for National Insurance purposes, and their pay must be reported to HMRC through PAYE.

If a director does not receive any salary or other taxable earnings from the company, there is no salary to process through payroll. A director might receive other types of income, such as dividends, which have different tax rules and are not processed through PAYE in the same way as salary.

Yes, a director of a limited company can pay themselves a salary through the company's payroll.

The salary is treated as employment income, so the company needs to operate PAYE and report the director's pay and deductions to HMRC. Directors have specific National Insurance rules, with contributions calculated on their annual earnings rather than separately for each pay period.

The most tax-efficient level of salary depends on the director's circumstances, including other income, National Insurance position and whether the company is eligible for Employment Allowance. Salary is only one way a director might take money from a company, with dividends subject to separate tax rules.

A director with the standard Personal Allowance can receive up to £12,570 of taxable income before paying Income Tax in the 2026/27 tax year, provided their Personal Allowance has not been reduced by other income.

The Personal Allowance applies to an individual's total taxable income, rather than specifically to a director's salary. It also starts to reduce when adjusted net income exceeds £100,000 and reaches zero at £125,140.

Income Tax is not the only consideration when deciding on a director's salary. National Insurance has separate rules, and a company also needs to consider employer National Insurance. For 2026/27, directors' employee National Insurance applies to annual earnings above £12,570, while employers normally pay Class 1 National Insurance above the relevant secondary threshold.

Yes, you can be a company director without taking a salary from the company.

There is no requirement for every director to receive a salary. If you do not take a salary or other taxable earnings from the company, there is no director's salary to process through PAYE. You might instead receive dividends if the company has sufficient distributable profits and the relevant requirements are met. Dividends have different tax rules from salary.

Whether taking a salary, dividends or a combination of both is appropriate depends on your circumstances and the company's financial position, so the most suitable approach should be considered with your accountant.