Category: National Insurance

Calculating the Class 4 NIC liability

The self-employed pay two classes of National Insurance contributions – Class 2 and Class 4. Class 2 contributions are weekly flat rate contributions which provide the mechanism by which the self-employed build up their entitlement to the state pension and certain contributory benefits. By contrast, Class 4 contributions are based on profits from the self-employment…


Read our quick guide on whether you should pay voluntary National Insurance Contributions

Voluntary NICs – should you pay? The payment of National Insurance contributions provides the mechanism by which an individual builds up their entitlement to the state pension and certain contributory benefits. Different classes of contribution provide different benefit entitlements. Employed earners pay Class 1 contributions where their earnings exceed the lower earnings limit – set…


It’s a criminal offence to fail to pay the minimum wage, read our blog to check you’re compliant.

Are you paying the minimum wage? The National Living Wage (NLW) and National Minimum Wage (NMW) increased from 1 April 2019.From that date, the NLW, payable to workers aged 25 and over, is set at £8.21 per hour. Workers under the age of 25 and over school leaving age must be paid the NMW appropriate…


Wanting to employ a family member? Read this first #familybusiness #tax

Employing family members It is permissible for a business to claim a tax deduction for the cost of a reasonable wage paid to a family member who helps in the business. Their duties could, for example, include answering the phone, going to the bank, bookkeeping and other administrative tasks. The tax legislation specifies that ‘in…


Directors’ NICs – the correct way to pay

The non-cumulative nature for calculating National Insurance Contributions (NICs) makes it possible to manipulate earnings to reduce the overall amount payable by taking advantage of the lower rate of primary Class 1 contributions payable once the upper earnings limit has been reached. For example, an employee who is paid £3,000 each month of the year…


Employees: tax-free benefits to keep them healthy

More than 25 million working days are lost annually due to work-related ill health matters, including the two leading causes of workplace absence, namely back injuries and stress, depression or anxiety. There are however, several areas where employers can use tax breaks and exemptions to help promote health and fitness at work. Gym facilities and…


Salary Vs Dividends: how to be tax efficient for 2019/20

A popular profits extraction strategy for personal and family companies is to extract a small salary, taking further profits as dividends. Where this strategy is pursued for 2019/20, what level should be the salary be set at to ensure the strategy remain tax efficient? Salary As well as being tax effective, taking a small salary…


Is tax payable on tips?

The question of whether tips and gratuities are taxable and subject to National Insurance Contributions (NICs) often results in a lively debate. Broadly, their treatment will depend on how they are paid to the recipient. Cash tips handed to an employee, or say, left on the table at a restaurant and retained by the employee,…


How you can use pensions to save tax for your business

Tax efficient remuneration using pension contributions In the lead-up to the 2018 Autumn Budget there was plenty of speculation that the Chancellor would take the opportunity to cut tax relief on pension contributions, which currently costs the Government around £38 billion a year. In the event, this was not to be the case, and the…