What is Director's Tax?

Directors Tax is used for an employee who is receiving two or more salaries. Only the salary from the first employer can make use of the tax credit and standard PAYE computations. The second salary is therefore taxed at the maximum tax band of the current tax year and therefore on the second salary, PAYE will be a flat percentage amount. eg 37.5 percent for the 2017 tax year. The way to tell Harvester to compute this Director's tax is to mark the employee as paying Director's tax on edit employee details. Look for "Director's Tax?" on the bottom right of the edit employee form. If an employee has been mistakenly assigned directors tax, remove the "Director's Tax?" tick on edit employee details. Then redo the payment for the current month by either editing the current payment or deleting it and then redoing it. Remember that if you put an employee on directors tax after you have already processed the payment for the employee for the current month, the effect will only take place for the next month, unless you simply edit the existing payment and re submit it for the current month.