National Insurance as a teacher / examiner

gavcradd

Hi,

Sorry if this is in the wrong place - feel free to move.

I'm a teacher in a secondary school and I also do bits of work for various exam boards, but not on a regular basis... I mark exam papers in the summer and get paid approx £1,500 (before tax) and I might do one or two other things during the year for which I'll be paid £100 / 200 ish each.

My question is regarding National Insurance on the work for exam boards - I currently pay 20% tax on everything from them, but nothing for National Insurance... is that right? I've always assumed that it must be right and trusted the finance people, but after reading a few things I thought I'd check - I don't want to suddenly get a big bill!

I've read up online, but everything refers to a second job as £x per week or per month - I don't get any second income regularly like this, it's one big lot once a year.

Thanks in advance, even if it's just to say "that's fine"

TheCyclingProgrammer

It all boils down to whether or not the work you are doing should be treated as irregular freelance/casual income or if you should actually be registered as self-employed.

If the work can be regarded as isolated pieces of freelance income, then there is no need to register as self-employed and pay NIC. You would simply owe tax at your marginal rate which, assuming you're not a higher rate tax payer and you have used up your personal allowance in your main job, would be 20% like you say. This income can be declared on a self-assessment in the box for "additional income" or up to a certain amount (£3k I think), collected through your tax code.

If however, you are considered to be trading, then you should have registered as self-employed. This would have made you liable to pay Class 2 NIC by default however for the amount you are earning, you would have been able to apply for a small exemptions certificate.

The basic test for whether or not you are self-employed is whether you are considered to be "trading". In evaluating whether or not you are "trading", HMRC would consider the various badges of trade tests:

http://www.hmrc.gov.uk/manuals/bimmanual/bim20200.htm

My (unprofessional) opinion, and it is just that, is that these occasional bits of extra work you do does not constitute trading but its borderline. I'd view it as casual/additional income, HMRC might take a different view. Have a read of the badges of trade and see what you think, or ring up HMRC self assessment hotline and ask their opinion.

Ultimately, due to the amount of additional income you're earning being under the threshold for the small earnings exemption, I wouldn't worry too much about it so long as you're declaring the income and paying tax on it. If HMRC were to challenge your self-employed status then you could potentially be looking at a fine for failing to register as self-employed and possibly for unpaid Class 2 NIC (as technically you need to have the SEE to avoid paying it) but I think that would be overly harsh.

If you want a belt and braces approach, then the safest thing to do is actually register as self employed and apply for the small exemptions certificate. This means you'll have to start completing a self-assessment, but you'll have no NIC to pay. You'll also have peace of mind. But ring HMRC and get their view first. They may tell you not to register as self-employed.

HTH.

Savvy_Sue

I'd say that what TCP says above is correct as it applies to freelance work / self-employment, BUT if you are having 20% tax deducted by the organisations for which you are working, then it sounds as if they are treating you as an employee.

In which case, I'd expect them to be able to calculate NI correctly, and it is worked out on a 'per payment' basis.

Do you receive payslips / a P60 at the end of the tax year / a P45 at the end of each marking period?

TheCyclingProgrammer

Just came across this which would seem to indicate that HMRC would consider what you do as self-employment rather than one-off pieces of freelance income:

http://www.hmrc.gov.uk/manuals/esmmanual/esm4151.htm

On that basis, you probably ought to consider registering as self-employed and applying for the SEE. You never know, but I still think HMRC would be unlikely to apply a penalty though.

TheCyclingProgrammer

Savvy_Sue wrote: »

I'd say that what TCP says above is correct as it applies to freelance work / self-employment, BUT if you are having 20% tax deducted by the organisations for which you are working, then it sounds as if they are treating you as an employee.

I read it as OP was putting aside 20% of each payment received to pay her own tax bill rather than it being deducted at source.

Having said that, going by the link I posted above, it would appear there is some kind of special agreement for examining bodies to deduct tax but not NIC, with the NIC being the employees liability, so perhaps some clarification is needed.

Its sounding more and more like a call to HMRC to clarify the situation is needed to me.

jimmo

http://www.hmrc.gov.uk/manuals/esmmanual/ESM4150.htm

gavcradd

Thanks for the relies. .. I should clarify that I'm certainly NOT self-employed, I get a pay slip with tax taken off every time I do any work and I get a P60 every year. They just take 20% tax but no NI. Just checking this is right?

TheCyclingProgrammer

gavcradd wrote: »

Thanks for the relies. .. I should clarify that I'm certainly NOT self-employed, I get a pay slip with tax taken off every time I do any work and I get a P60 every year. They just take 20% tax but no NI. Just checking this is right?

It would have been helpful if you'd made that clear in your original post.

That said, it would appear that you may still be classed as self employed for NIC purposes. See:

http://www.hmrc.gov.uk/manuals/esmmanual/ESM4150.htm

booksurr

gavcradd wrote: »

Just checking this is right?

as per Jimmo's link you are automatically regarded as self employed irrespective of what you may think, you therefore need to register accordingly

TheCyclingProgrammer

booksurr wrote: »

as per Jimmo's link you are automatically regarded as self employed irrespective of what you may think, you therefore need to register accordingly

I'm not sure about this. This is very much a special case situation and OP should speak to HMRC about this. Being treated as self employed for the purposes of NIC only is unusual and HMRC may not need them to register as such, especially as the income is under the small earnings exemption threshold.

OPs employer may not be using the special arrangements. It might also be worth OP asking their employer.

http://www.hmrc.gov.uk/manuals/pommanual/paye70245.htm

Also:

http://www.hmrc.gov.uk/manuals/pommanual/paye20115.htm

The fact that OP gets a P60 would seem to suggest that their employer is not using this special scheme. In which case, then reason that their employer has not deducted NI is probably due to the income in that employment being below the LEL.

Savvy_Sue

OP, I'd go with whatever it says in jimmo's link ...

jimmo wrote: »

http://www.hmrc.gov.uk/manuals/esmmanual/ESM4150.htm