Tag: Self Employed

National Insurance Rate Changes from 6th January 2024

The amount of National Insurance you pay depends on your employment status and how much you earn.

If you’re employed

You pay Class 1 National Insurance contributions.

The Class 1 National Insurance rates for most people for the 2023 to 2024 tax year are:

Your payFrom 6 April 2023 to 5 January 2024From 6 January 2024 to 5 April 2024
£242 to £967 a week (£1,048 to £4,189 a month)12%10%
Over £967 a week (£4,189 a month)2%2%

You’ll pay less if:

Employers pay a different rate of National Insurance depending on their employees’ category letters.

How to pay

You pay National Insurance with your tax. Your employer will take it from your wages before you get paid. Your payslip will show your contributions.

If you’re a director of a limited company, you may also be your own employee and pay Class 1 National Insurance through your PAYE payroll.

If you’re self-employed

You pay Class 2 and Class 4 National Insurance, depending on your profits. Most people pay both through Self Assessment.

If your profits are between £6,725 and £12,570 a year, your contributions are treated as having been paid to protect your National Insurance record.

You may be able to pay voluntary contributions to avoid gaps in your National Insurance record if you:

  • have profits of less than £6,725 a year from your self-employment
  • have a specific job (such as an examiner or business owner in property or land) and you do not pay Class 2 National Insurance through Self Assessment

If you have gaps and do not pay voluntary contributions, this may affect the benefits you can get, such as the State Pension.

If you have a specific job and you do not pay Class 2 National Insurance through Self Assessment, you need to contact HM Revenue and Customs (HMRC) to arrange a voluntary payment.

If you’re employed and self-employed

You might be an employee but also do self-employed work. In this case your employer will deduct your Class 1 National Insurance from your wages, and you may have to pay Class 2 and 4 National Insurance for your self-employed work.

How much you pay depends on your combined wages and your self-employed work. HMRC will let you know how much National Insurance is due after you’ve filed your Self Assessment tax return.

Directors, landlords and share fishermen

There are different National Insurance rules if you’re a:

You can apply to HMRC to check your National Insurance record and claim a refund if you think you’ve overpaid.

COVID-19 Support for Self-Employed

Chancellor announces additional measures to help businesses and the self-employed impacted by COVID-19

The Chancellor announced a major package of support for the self-employed:

  • HMG will pay the self-employed a taxable grant worth 80% of their average monthly profits over the last three years up to £2500 per month
  • This will be available for three months. Will be extended if necessary
  • People can claim these grants and continue to do business
  • Covers self-employed same as those furloughed

To ensure the funds reaches the people most in need:

  • Open to anyone of trading profits of up to £50,000
  • Available to people who i) make the majority of their income being self-employed, ii) Have a self-employed tax return for 2019

How to access

  • HMRC will contact you directly and you’ll have to fill out a form
  • HMRC will pay the grant directly to bank accounts.
  • Aim is to pay at the beginning of June (3 months backdated). Hoping to be quicker than that but recognition HMRC are now having to design two new systems
  • Anyone who missed the Jan filing deadline has an extra 4 weeks from today to submit their tax return

Further Details can be found at – https://www.gov.uk/government/news/chancellor-gives-support-to-millions-of-self-employed-individuals