National Insurance
National Insurance Numbers
Everybody has a unique National Insurance number as that is their
account number with the Inland Revenue and Department for Work and
Pensions (DWP). When starting work, people should tell their employers
what their National Insurance number is, so that contributions made
by them can be noted on their National Insurance account. Therefore,
if the wrong National Insurance number is given, their contribution
records will remain unchanged and benefit payments would be delayed.
National Insurance Contributions
The majority of employees in the UK have to pay National Insurance
contributions (NICs) although the class of contribution that these
people are in differs. Also, in a person's lifetime, the class of
contribution that they are in also differs, as it is based on their
circumstances. This would then involve changing the class paid or
possibly having to pay more than one class at the same time.
Some contributions count to certain benefits whilst
others are protected through right. Therefore, it is important for
all people who pay NICs to know what class they are in; these are
shown in the table below.
| Class 1: |
Paid by employed earners and their employers |
| Class 1A: |
Paid by employers providing directors/employees
with benefits in kind (only when used for private matters) |
| Class 1B: |
Paid by employers entered into PAYE Settlement
Agreement (PSA) with Inland Revenue for tax reasons |
| Class 2: |
Paid by self-employed people |
| Class 3: |
Paid by people protecting their entitlement to
the State Pension and do not pay enough NICs in another class |
| Class 4: |
Paid by people whose profits/gains are chargeable
to income tax under Income and Corporation Taxes Act 1988 Schedule
D, Cases I and II, i.e. mostly self-employed people |
The limits and earnings thresholds for Class 1 contributions
are as follows:
|
Lower Earnings Limit
|
Earnings Threshold
|
Upper Earnings Limit
|
| Weekly |
£84
|
£97
|
£645
|
| Monthly |
£364
|
£421
|
£2,795
|
| Yearly |
£4,368
|
£5,035
|
£33,540
|
Class 2 contributions are payable at £2.10
p/week; Class 4 contributions are payable at 8% on profits/gains
between £5,035 and £33,540, and 1% on profits/gains
over £33,540. If you need help deciding what class you belong
to or have any queries with National Insurance contributions, contact
Academy Accounting Ltd today on 0141 891 5999 or e-mail us at enquiry@academyaccounting.co.uk.
|
