Directors' Salaries, Remuneration & Employers NI: Codes 7001, 7002 & 7012

Director pay is kept separate from ordinary staff pay throughout Sage's chart of accounts — partly because directors are officers of the company as well as employees, and partly because their pay is often structured differently, mixing salary with dividends.

The codes, and what each one holds

Code 7001 — Directors' Salaries records the regular salary paid to directors through payroll.

Code 7002 — Directors' Remuneration is a broader code sometimes used for the total cost of rewarding directors, including salary and other payroll-based benefits.

Code 7012 — Employers N.I. (Directors) records employer's National Insurance contributions specifically on directors' pay, calculated differently to regular employees' NI due to the annual earnings period rules that apply to directors. All three are Overheads codes and normally carry a debit balance.

A worked example

Say a company pays its sole director a modest £1,047 monthly salary (aligned to the NI secondary threshold), triggering no employer's NI at that level.

Directors' Salaries (code 7001): £1,047 debited each month.

Employers N.I. (Directors) (code 7012): £0 debited this month, since pay sits at the threshold — this code would only move once the director's cumulative pay for the year crosses the relevant NI threshold.

Why this matters day to day

Keeping director pay in its own codes makes it far easier to see the true cost of running the board separately from the wider workforce, which matters for smaller companies where a director's salary is often deliberately kept low to work alongside dividend income. Since director NI is calculated on an annual, cumulative basis rather than per pay period like regular staff, tracking code 7012 separately also helps catch errors before a year-end NI reconciliation throws up a surprise.