National Insurance Contributions

National Insurance Contributions (NIC) are assessed on earnings and are effectively another form of income tax. With careful planning, it is sometimes possible to mitigate or totally remove this tax cost, although consideration has to be given to the potential loss of state pension and benefits, if insufficient contributions are paid.

Specific areas which we are typically asked to advise on include:

• Checking and correcting apparent 'gap years' in individual's NIC payment statements maintained by the National Insurance Contributions Office in Newxastle.
• Advising on paying Class 3 voluntary NIC.
• Reducing NIC by drawing dividends instead of salary, from a family trading company.
• Calculating Class 1A NIC on benefits in kind.
• Saving NIC by salary sacrifice and employer contributions into pension schemes, childcare vouchers, etc.
• Paying PAYE and NIC quarterly instead of monthly.
• Paying NIC on more than one source of earned income.
• Advising you on current UK NIC rates.

Our specialist tax team, including ex-Inland Revenue Tax Inspectors, can advise on these planning opportunities. We understand and are able to claim maximum benefit from the following reliefs, allowances and exemptions:

• Contracted out NIC rebates
• Claiming exemption and exception from NIC.
• NIC on share option transactions
• Statutory Maternity Pay and Statutory Sick Pay
• Pre 5th April tax planning

As with other taxes, national insurance contributions require careful consideration before obtaining an income source, to ensure that the amount payable is kept to a minimum.