National Insurance Contributions

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

Our tax technicians can advise in relation to class 1, class 2, class 3 and class 4 NIC. In particular, clients are often interested in:

  • The relative NIC costs of Salary v’s Dividends,
  • Class 2 and 4 NIC for the self employed,
  • NIC and share options,
  • Class 1a NIC on benefits in kind,
  • Saving class 1 NIC by salary sacrifice for employer pension contributions or childcare vouchers,
  • Paying class 1 NIC quarterly instead of monthly,
  • Outsourcing your class 1 NIC calculations to our payroll bureau service,
  • NIC on the speculative development of part of your garden,

Advising HM Revenue & Customs and the Contributions Agency of your income which is liable to National Insurance Contributions is principally achieved by completing the employment supplementary pages of a normal personal self assessment  tax return. Clients who are fearful that this liability may be investigated by HM Revenue & Customs may wish to consider taking out our tax investigation insurance.

Most people consider national insurance contributions as another unwelcome tax. As well as seeking to reduce this cost, our tax technicians will prepare all of the necessary paperwork and communicate with HMRC and the Contributions Agency on your behalf, so that you have peace of mind that your tax affairs are dealt with in a timely and professional manner.

Latest Blogs in National Insurance Contributions
Steven Denton
15th September 2021 The Health & Social Care Levy

On the face of things perhaps no big deal, but in a society that has traditionally seen very small changes to the tax & NI system a 10% rise in one fell swoop is not one to be casually shrugged off.   Assuming current NI banding remains unchanged in the 2022-23 tax year, the budget…

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Nick Edgley
9th September 2021 The new Health and Social Care Levy – increases to NIC and dividend tax

The new levy will increase all NIC rates by 1.25% from April 2022, this will affect employees, employers, self employed and the NIC paid on P11D benefits (such as company cars and private health care). The increase will apply to employed (include deemed employees) and self-employed individuals and partners earning above the class 1 primary…

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Steven Denton
5th August 2021 New NI Codes for Freeports

In case you thought the NI coding system was becoming too easy to follow, HMRC have announced 4 more NI codes in order to comply with the new regulations, starting in April 2022, for those companies trading within one of the newly established Freeport areas.   F – standard category letter I – married women…

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Matilda Mawson
25th September 2020 2019/20 Pension Savings Statement – Request yours today!

  If you have made contributions to a registered pension scheme of more than £40,000 in the tax year, your scheme administrator should automatically send you a pension savings statement by 6 October 2020. This will detail your total pension input for the 2019/20 tax year as well as your pension input for the 3…

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Bethan Hassey
8th April 2020 Changes to Employment Allowance

Employment Allowance can be claimed to reduce the amount of Employer National Insurance payable. The 2020/21 tax year has introduced the following changes to Employment Allowance: The allowance has been increased from £3,000 per year to £4,000 per year You can only claim the Employment Allowance if your total Secondary Class 1 National Insurance liability…

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Ruth Pearson
5th March 2020 Employment Allowance Reform

The Employer Allowance was first introduced in April 2014, giving employers a reduction of £2,000 against their Employer’s NIC bill.   This was further increased in value from April 2016 to £3,000 and in addition the scheme was reformed to exclude single-director companies.   It has remained at £3,000 ever since and is claimed via…

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Matilda Mawson
2nd October 2019 Class 2 National Insurance – HMRC’s ongoing issues

July 2015 saw the end of direct debit collection for Class 2 National Insurance. Contributions are now collected through self-assessment and, despite there being 4 years since the change in the way payments are made, HMRC are still having teething problems. The issues arise as HMRC are running two computer systems side by side: national…

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Steven Denton
10th September 2019 Employer allowance – is it worth the hassle?

The £3000.00 employer allowance ceases at the end of the current tax year. From April 2020 employers will have to re-apply for a di minimis state aid based allowance.   A new HMRC checklist will have to completed to declare the following;   NIC contributions in the previous tax year were beneath £100,000; Confirmation that…

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Karen Moore
3rd September 2019 National Payroll Week – Keeping the UK Paid

2019 marks the 21st Anniversary of National Payroll Week which is from 2 to 6 September 2019.   National Payroll Week recognises and celebrates the importance of payroll in business and the UK economy.  Not many people may know that there are 1.3 million employers in the UK and that Payroll is the largest expenditure…

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Lucy Bayliss
4th July 2019 PAYE Settlement Agreement Deadline – 6 July 2019

A PAYE Settlement agreement allows employers to make one annual payment to cover the tax and National Insurance liability on minor, irregular or impracticable expenses for any employees. HMRC have now changed the process for PSAs and, instead of applying for a new PSA annually, from 2018-19 employers will have an enduring agreement and therefore…

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