Employees frequently use their cars for work and may be paid a mileage allowance by their employer for doing so. Employers are generally familiar with the rates that can be paid tax-free; however, it is easy to assume (wrongly as it happens) that the same rules apply for National Insurance purposes. While it is true…
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…
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…
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WAGES PAID TO FAMILY MEMBERS: To reduce profits, consider employing members of your family who are not currently employed. They can use their unused personal allowance to cover the wages that you pay them. You can claim their wages against your profits. You must, pay them a competitive market rate for their services and only pay for the hours that they work for you. National Minimum Wage rules also need to be applied.
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