National Insuarnce and Income Tax

garichd

Hi ,

My Wife just got the job in the month of feb , so her total Income for this financial year will be less then £ 4895. she got her pay slip today where employer deduct the National Insuarnce and Income Tax from her salery.

I know we can take the Income tax refund but I am not sure about the National Insuarnce. can some one please guide me how the national insurance is calculated and whats the personal allownses for calculating NI.

gari..

CIS

NI has a threshold of £4888, any earnings over £94 per week are insurable .

Assuming shes contracted in to S2P, she will be Insured at 11% on wages over the £94.

If shes not earning more than £94, then the NI has been deducted wrongly and she needs to have it sorted.

If a person earns under £82, then they pay no NI. If they earn between £82 and £94 per week the NI is credited for them with no NI actually deducted from wages.

pchelpman

How is NI calculated?

Unlike tax National Insurance is not calculated on the basis of what is earned in a full year (the one exception being if you are on the "annual basis" such as for a director). What this means is that the NI bill is calculated with reference to what has been earned IN THAT PARTICULAR WEEK/MONTH without regard to anything else.

For example .... if someone earns £20 in one week ... no NI. Yet if they then earn £100 the next week ... NI is charged on that £100 irrespective of the fact that only £20 was earned last week.

However, if an average of £60 was earned each week then no NI would have been charged at all as £60 is below the weekly lower limit.

What is the NI personal allowance?

Again, unlike tax, there is no "personal allowance", as such. Instead the "lower limit", below which no NI is charged, is set at roughly the same level.

So, for this tax year, employees don't pay any NI if they earn up to £94 in a week. As you now appreciate this £94 cannot be averaged over several weeks.

Hope this helps. Please post back if further clarification is wanted.

garichd

Thanks pchelpman,

your post cleared all the doubts.

gari..

pchelpman wrote:

How is NI calculated?

Unlike tax National Insurance is not calculated on the basis of what is earned in a full year (the one exception being if you are on the "annual basis" such as for a director). What this means is that the NI bill is calculated with reference to what has been earned IN THAT PARTICULAR WEEK/MONTH without regard to anything else.

For example .... if someone earns £20 in one week ... no NI. Yet if they then earn £100 the next week ... NI is charged on that £100 irrespective of the fact that only £20 was earned last week.

However, if an average of £60 was earned each week then no NI would have been charged at all as £60 is below the weekly lower limit.

What is the NI personal allowance?

Again, unlike tax, there is no "personal allowance", as such. Instead the "lower limit", below which no NI is charged, is set at roughly the same level.

So, for this tax year, employees don't pay any NI if they earn up to £94 in a week. As you now appreciate this £94 cannot be averaged over several weeks.

Hope this helps. Please post back if further clarification is wanted.

Joe_Bloggs

Do these rules apply to those above retirement age and working part time ?
J_B.

pchelpman

Employees over State pension age, currently 60 for women and 65 for men, do not have to pay the employee's contribution. Before an employer can stop deducting contributions they must see proof of age.

This can be a birth certificate, passport or preferably a certificate of exception (form CF384) issued by the HMRC National Insurance Contributions Office.

To apply for a certificate of exception (CF384) you need to write to:

HMRC National Insurance Contributions Office
Class 1 Caseworker
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

This might answer any further questions ...

http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/BeginnersGuideToTaxArticles/fs/en?CONTENT_ID=4015904&chk=izW7Qe

Hope this helps but do post back if not.

Cheers.

Joe_Bloggs

Im reading through the link supplied by pchelpman it lists the agencies that you should divulge your national insurance number. The list is:-

• HM Revenue & Customs (HMRC)
• your employer
• Jobcentre Plus, if you claim Jobseeker's Allowance
• your local council, if you claim Housing Benefit.

I was requested to give my NI number on a mini-cash isa application. Is the list incomplete or are savings institutions asking more than they should?
A quirky aside.
My savings institution accepted my NI number whilst my 'local' HMRC tax office claimed it did not exist. Do EU citizens working here get NI numbers ?
J_B. (Many Thanks to those at Long Benton.)

margaretclare

Hi Joe

No, you need to divulge your NI number for any ISA applications - this is because the tax people need to know about the ISA.

Aunty Margaret

Joe_Bloggs

Many thanks MargerateClare.
I now realise the logic of the situation. But who can change this mis-information that is given to the public? The offending page is:-
http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/BeginnersGuideToTaxArticles/fs/en?CONTENT_ID=4015904&chk=izW7Qe


The second part of my question remains. I restate, how do EU citizens get to use tax wrappers such as ISAs without a NI number ?
Regards and Thanks J_B.

try2save

I wondered if anyone would know how I should go about claiming tax back for the 2004/5 tax year

My total earnings were £4933. I was taxed on 474L W1 code on all wages, amounts varied. Only £4233 was on my P60 due to company merge after 4 weeks. I paid £453 tax but only £382 on P60. £71 before merge.

I have all wageslips and P60. My tax office I believe is Maidstone, Kent.

How can I go about claiming tax back?

Chippy_Minton

try2save, see HMRC - Claim a tax or NI repayment.