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.

Real-world examples across industries

Owner-managed consultancy

A sole director of a small consultancy draws a modest £750 monthly salary, deliberately set near the annual Class 1 National Insurance threshold, topping up income with dividends instead since dividends attract neither employer nor employee NI. The entry is a debit of £750 to 7001 (Directors' Salaries) and a credit of £750 to 1200 (Bank); no VAT applies. Because the director is also the only employee paid above the secondary NI threshold, the company can't claim the Employment Allowance against employer NI — it's specifically excluded for single-director companies with no other qualifying staff — so 7012 (Employers N.I. (Directors)) stays at £0 this month, since pay sits at the threshold anyway.

Multi-director trading company

A trading company with three working directors pays each a full market-rate salary reflecting their operational role, a combined monthly cost of £14,500 debited to 7001 and credited to 1200. One director also receives an annual profit-related bonus of £6,000, voted once year-end results are known and posted separately to 7002 (Directors' Remuneration) rather than blended into the regular monthly figure, so the two can be tracked and reported distinctly. Because pay at this level clears the NI thresholds comfortably, employer's NI applies in full — a combined £2,180 for the month debited to 7012 and credited to 1200 or a PAYE/NI control account — and because the company has other qualifying staff beyond the directors, it can offset part of this against the Employment Allowance.

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.