Overpaid National Insurance

mulronie

I don't have much to offer on the actual mechanics of this, but this whole situation is a farce and I really hope the press and MSE pick it up and publicly pull HMRC's pants down over it.

HMRC are effectively aware that certain people are being forced to overpay NI, with no mechanism to rectify it other than to say "ask your employer, but they might say no". It really is a scandal; HMRC are getting the money, it should be them who gives it back - and quickly.

briskly_2

I don't think the press will pick up on it. I wrote to Paul Lewis (Moneybox Live etc) and had no response. Is there anyone on the forum who could get the press to pick this up?

EvieSaver

briskly wrote: »

Hi EvieSaver,

Sorry to hear you have had the same problem. Have you ever managed to get a refund from them?

Unfortunately no.

briskly_2

Going a little off-subject here, but still thinking about saving tax. Looking at the NI rules it would appear that if you have a second job you have a weekly or monthly NIC allowance for that job too. Surely this could lead to the ridiculous situation that someone on an annual wage of £25,000 would be pay no NIC at all if they worked one day a week for each of five different companies - as the £400 or so a month from each of the five jobs would below the NI threshhold. This would save about £2,200 a year in NI and a fair bit for the employers too. What is to stop firms from setting up subsidiary companies to pay in this way?

Pennywise

briskly wrote: »

Going a little off-subject here, but still thinking about saving tax. Looking at the NI rules it would appear that if you have a second job you have a weekly or monthly NIC allowance for that job too. Surely this could lead to the ridiculous situation that someone on an annual wage of £25,000 would be pay no NIC at all if they worked one day a week for each of five different companies - as the £400 or so a month from each of the five jobs would below the NI threshhold. This would save about £2,200 a year in NI and a fair bit for the employers too. What is to stop firms from setting up subsidiary companies to pay in this way?

To take your second point first, HMRC do have powers to prevent that kind of abuse.

Back to your first point, yes, you're absolutely right and lots of people avoid paying NIC in that way, i.e. by having two or more part time jobs.

NIC is an absolute disaster and hasn't moved with the times. When it was set up, the rules worked OK, but in today's world, it's ridiculous. It's time it was scrapped completely and the basic rate of income tax increased accordingly. NIC causes a lot of distortion and is an additional tax on workers which is a stupid situation as workers need to be encouraged, not over-taxed. People on similar incomes pay different amounts of NIC or none at all. I.e. if all your income is from pensions or investments (dividends, but to lets etc), you pay no NIC. The NIC for self employed is different to that for employees (as are the benefits). When set up, paying the full quota of NICs got you state benefits, but now everyone is entitled to some state benefits regardless of NIC paying history. It's all an absolute nonsense and it's time to get rid.