Skip to content

Are You Paying Too Much National Insurance?

Are You Paying Too Much National Insurance?

Vanessa Cresswell

Vanessa Cresswell

Click edit button to change this text. Lorem ipsum dolor sit amet consectetur adipiscing elit dolor

Are You Paying Too Much National Insurance?

Most people who earn £162 or more per week (or £6,205 or more a year if you’re self-employed) pay National Insurance. If you simply have one PAYE job, National Insurance is often fairly simple. However, there are some aspects that can complicate things and lead to you paying too much.

If you have more than one job or if you’re both employed and self-employed, you’ll want to make sure you’re not overpaying on your National Insurance contributions. So how do you know if you’re paying too much?

There is a prescribed annual maximum normal contribution, which is 53 weeks at the standard primary Class 1 contribution rate between the earnings threshold and the upper earnings limit.

This means that the maximum amount for 2018/19 is £4,642.80, and there is a further 2% to pay on earnings above the upper limit (currently over £892 per week or £3,863 per month).

To avoid going over this amount, you can apply for deferment of contributions, which is best to do before the start of the tax year.

Deferring Class 1 National Insurance

You might be able to defer Class 1 National Insurance if you’re an employee with more than one job. This can apply if you either pay Class 1 National Insurance with more than one employer, earn £892 per week or more with one employer or earn £1,053 or more per week from two jobs.

By deferring, you will usually pay a reduced rate of 2% on earnings between £162 and £892 for one of your jobs.

Class 2 National Insurance

If you’re self-employed, you might expect your earnings to be below the threshold for Class 2 National Insurance. This is £6,205 for 2018/19; above this, you are expected to pay £2.95 per week.

You can apply for an exception if your profits are going to be below this amount. However, some people choose to voluntarily pay Class 2 National Insurance contributions to maintain the benefits that they receive from payments.

Class 4 National Insurance

It’s no longer possible to defer Class 4 National Insurance, which is paid at 9% of self-employed profits between £8,424 and £46,350 per year, and 2% above that.

However, you can apply for a refund from previous tax years if you think that you have paid too much.

How To Defer Your National Insurance

If you want to defer your national insurance contributions, you can send form CA72A to HMRC before the 14th of February if you’re employed or 31st January if you’re self-employed. You can do this online using Government Gateway or by sending a paper form.

At the end of the tax year, HMRC will check to see if you have paid enough National Insurance and let you know if you have any more due.

To pay it, you are asked to send your payslip and a cheque to HMRC or if you don’t have a payslip, your contact details with your National Insurance Number and the amount that you’re paying.

Final Thoughts

If you still feel unsure if you are overpaying for your National Insurance, or simply feel like you could do with a hand when it comes to deferments, then get in touch with Three Kings Accounting on 01753 840 188.

Share this with your friends

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

More to explore

Venture Capital Trusts

Venture Capital Trusts (VCTs) are complementary to the Enterprise Investment Scheme (EIS), in that both are designed to encourage private individuals to invest in smaller high-risk unquoted trading companies affected by the equity gap. While the EIS requires an investment to be made directly into the shares of the company, VCTs operate by indirect investment through a mediated fund.

Read More »

VAT Flat Rate Scheme

The flat rate scheme for small businesses was introduced to reduce the administrative burden imposed when operating VAT. Under the scheme a set percentage is applied to the turnover of the business as a one-off calculation instead of having to identify and record the VAT on each sale and purchase you make.

Read More »

VAT – Seven Key Points for the Smaller Business

This factsheet focuses on VAT matters of relevance to the smaller business. A primary aim is to highlight common risk areas as a better understanding can contribute to a reduction of errors and help to minimise penalties. Another key ingredient in achieving that aim is good record keeping, otherwise there is an increased risk that the VAT return could be prepared on the basis of incomplete or incorrect information.

Read More »

VAT – Cash Accounting

Cash accounting enables a business to account for and pay VAT on the basis of cash received and paid rather than on the basis of invoices issued and received.

Read More »

VAT – Bad Debt Relief

It is quite possible within the VAT system for a business to be in the position of having to pay over VAT to HMRC while not having received payment from their customer. Bad debt relief allows businesses, that have made supplies on which they have accounted for and paid VAT but for which they have not received payment, to claim a refund of the VAT by reference to the outstanding amount.

Read More »

VAT

VAT registered businesses act as unpaid tax collectors and are required to account both promptly and accurately for all the tax revenue collected by them. The VAT system is policed by HMRC with heavy penalties for breaches of the legislation. Ignorance is not an acceptable excuse for not complying with the rules. We highlight below some of the areas that you need to consider.

Read More »