You don't need to do anything different for directors at year end.

However, to comply with government legislation, when you process the final pay period for a director whose NI has been calculated using the Pro-rata basis, Sage 50 Payroll automatically recalculates the director's contributions on an Annual basis.

When you process the final period of the tax year for a Director (Pro-rata basis), the following message appears:

'This director has been recalculated on a YTD basis.'

This message is normal, and you should click OK and then continue to process as usual.

Pro-rata basis

With the Pro-rata basis, a director's NI contributions are calculated in the same way as a standard employee so that they pay NI for all months of the tax year. At the end of the tax year, a recalculation takes place in the final period based on their cumulative earnings for the year. This might result in a director paying more or less NI in this final period.

Annual basis

Directors can earn up to the annual primary threshold (PT) before they begin to pay NI. Because of this, a Director may start the year without paying any NI, and start paying NI only when their yearly earnings exceed the annual PT.

Calculation examples

For further information on how NI is calculated when using Pro-rata basis and Annual basis, read our Example calculations of directors NI.