National Insuarnce and Income Tax

try2save

neither of the forms seem appropriate

I have paid too much tax because of my tax code 474L W1

but last year earnings of £4933 with £453 tax doesnt add up

isasmurf

The best thing to do is to phone your tax office and explain the situation to them. They will advise you what to do next.

try2save

isasmurf wrote:

The best thing to do is to phone your tax office and explain the situation to them. They will advise you what to do next.

will do - cheers - got a number for them from HMRC site :T

apples1

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.

Hi, I came onto this board to post question about NI and found this thread. The post quoted above helped but my question now is... what if you are paid monthly then how does the £94 per week work if you cannot average it out over several weeks? What can I earn per month before NI becomes due? Also is there any downside of not paying NI? Would I be losing out on anything if my salary is too low each month for NI to be due? I have recently returned to part time work having been full time Mum since my daughter was born 3 and a half years ago. No Ni is being deducted on my payslip and I wanted to check that this is correct.

Cheers

pchelpman

apples1 wrote:

Hi, I came onto this board to post question about NI and found this thread. The post quoted above [my post #3 above; PCHM] helped but my question now is... what if you are paid monthly then how does the £94 per week work if you cannot average it out over several weeks? What can I earn per month before NI becomes due? Also is there any downside of not paying NI? Would I be losing out on anything if my salary is too low each month for NI to be due? I have recently returned to part time work having been full time Mum since my daughter was born 3 and a half years ago. No Ni is being deducted on my payslip and I wanted to check that this is correct.

Cheers

OK. Let's break this down.

what if you are paid monthly then how does the £94 per week work if you cannot average it out over several weeks? > The £94 I mentioned is the weekly equivalent of an annual allowance (roughly) of £4895.

What can I earn per month before NI becomes due? > Therefore the monthly amount - if 12 monthly payments are involved- is the annual figure divided by 12, namely, £407.

Also is there any downside of not paying NI? > Primarily you may jeopordise your entitlement to the state pension on retirement and/or other state benefits given only to people who have paid National Insurance.

Would I be losing out on anything if my salary is too low each month for NI to be due? > If you are not required to pay NI then you may make voluntary payments to retain your entitlement to those benefits. These are called "Class 3 contributiuons".

Hope this helps.

apples1

thank you for explaining all that so well and answering my question, much appreciated. I am now sure that I am earning below that level so am not required to pay NI. Do you think i should pay these class 3 contributions? I am only on a 12 month fixed contract although hope this may be extended. I don't have a pension.

CIS

If you earn between £82 and £94 each week then you will get NI credited for you with no need to pay them, if you want to pay the Class 3 (£7.15 p/wk), make sure its worth your while.

Get a State Pension forecast on 0845 3000 168 or https://www.thepensionservice.gov.uk, and it'll give you an idea as to whether you need the pay the contributions and if so how much you need to pay (you'll just need to top up any employed earnings).

CIS

If you earn between £82 and £94 each week then you will get NI credited for you with no need to pay them, if you want to pay the Class 3 (£7.15 p/wk), make sure its worth your while.

If you earn above £4264 in total across the 05/06 tax year, you will achieve a qualifying year (52 x the LEL).

Get a State Pension forecast on 0845 3000 168 or https://www.thepensionservice.gov.uk, and it'll give you an idea as to whether you need the pay the contributions and if so how much you need to pay (you'll just need to top up any employed earnings).

Savvy_Sue

Joe Bloggs, if an EU national is working in this country, then I believe they should be given a NINo. And I'm sure the employer's pages of the HMRC site will explain how to get a NINo for someone who doesn't have one. Employers may use a temporary NINo while waiting for the 'real' one to arrive, IIRC.

CIS

Guidance for non UK nationals to get a NINO

http://www.hmrc.gov.uk/manuals/nimmanual/NIM39325.htm