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
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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Vanessa Pearson
19th October 2018 Increasing publicity over IR35

In the run up to the Autumn Budget, where it is widely speculated the Government will clamp down on IR35 in the private sector, barely a week goes by without another IR35 case being in the news. Employment tribunal claims are increasingly being launched by those caught by the IR35 reforms of the public sector.…

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Andrew Winearls
28th January 2017 State Pension Entitlement

Voluntary Payment of Class 2 NIC by Self-Employed: Protect your state pension ? Self-employed individuals and Partners in trading Partnerships now pay class 2 national insurance contributions annually on 31st January following the end of the tax year through their Self-Assessment Return. Prior to 5th April 2015 those on low incomes had to pay Class…

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Ian Piper
24th January 2016 Tax Efficient Remuneration

Examining whether it is best to run the business as a limited company or otherwise (sole trader, partnership or LLP), If operated as a limited company: Looking at the combined business and personal tax ‘picture’ and optimising the mix of retained profits, salary, bonus and dividends (for the business owner and, where relevant, immediate family…

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