National Insurance

Steve_xx

Question:

1. A person is employed part time and self employed for the remainder of the time.
2. Pay NIC's 1,2 & 4
3. Earns £26k on employed basis and £22k on self-employed basis.

How is total NI bill calculated? I understand that as an employee he pays NI at 11% and for the self-employed portion pays 8% of profits. I understand that you don't pay NI on the first £5435? Does this mean that the first £5435 is exempt twice, ie on the employed and self-employed basis, or is it the case that the total earnings from employed and self-employed income are totalled and that the first £5435 is exempt from NI?

fengirl_2

Yes, you get two lots of exemptions - this applies even if you have two employed jobs.

Steve_xx

Thanks for your reply. That comes as a bit of a surprise. I was expecting that both sums would be added together and a £5435 exemption applied to the whole. So then, due to the fact that both portions are treated singly, he would be better of to stay as is rather than going wholly self-employed since he currently has two lots of £5435 where he is exempt from NI?

fengirl_2

yes, but you dont only do things for tax reasons!