NI Contributions- discovery for people with more than one job

wayoflife

Just a bit of advice for this minefield called tax and NI!

I have just found out that you do not pay NI if you earn under £435.00 NET a month for each sperate emplyment.

This was particularly helpful for me, as I have a 2nd job and if you earn more than this you are 'taxed' at the full rate of 11% for the entire amount.

e.g. If you were earning £5.00 an hour then you could work 87 hours in that month and not pay any NI contributions. work 1 extra hour and you will earn £440.00 (just £5.00 over the threashold) therefore your NI (assuming you are paying catagory A) would be £48.40!!!!!! meaning a £43.40 loss for working that extra hour!!!

Its worth looking at, as you could work less and get paid more!

Comments would be appreciated, and if you dont understand it please ask!!!

cheers

EdInvestor

You need to be aware of the impact this will have on your eventual state pensions.

wayoflife

EdInvestor wrote: »

You need to be aware of the impact this will have on your eventual state pensions.

what do you mean by this?

If it is for a second job then you will be already contributing NI payments (believe me I am!) and therefore it will not matter? Is that what you mean?

chesky369

"I have just found out that you do not pay NI if you earn under £435.00 NET a month for each sperate emplyment."

You imply by this that you won't be paying NI at all, which is not a particularly good thing.

noh

wayoflife wrote: »

Just a bit of advice for this minefield called tax and NI!

I have just found out that you do not pay NI if you earn under £435.00 NET a month for each sperate emplyment.

This was particularly helpful for me, as I have a 2nd job and if you earn more than this you are 'taxed' at the full rate of 11% for the entire amount.

e.g. If you were earning £5.00 an hour then you could work 87 hours in that month and not pay any NI contributions. work 1 extra hour and you will earn £440.00 (just £5.00 over the threashold) therefore your NI (assuming you are paying catagory A) would be £48.40!!!!!! meaning a £43.40 loss for working that extra hour!!!

Its worth looking at, as you could work less and get paid more!

Comments would be appreciated, and if you dont understand it please ask!!!

cheers

Is that correct?
I believe that they are treated as two seperate employments (if they are with different employers) so you do not pay 11% on the full £440 in your example you would pay 11% on £5 ie 55p.
Calculator here:- http://nicecalculator.inlandrevenue.gov.uk/Class1NICs1.aspx

Nigel

wayoflife

chesky369 wrote: »

"I have just found out that you do not pay NI if you earn under £435.00 NET a month for each sperate emplyment."

You imply by this that you won't be paying NI at all, which is not a particularly good thing.

Ok, apologies for that. I was referring to someone who was already paying NI contributions with a 2nd job

wayoflife

noh wrote: »

Is that correct?
I believe that they are treated as two seperate employments (if they are with different employers) so you do not pay 11% on the full £440 in your example you would pay 11% on £5 ie 55p.
Calculator here:- http://nicecalculator.inlandrevenue.gov.uk/Class1NICs1.aspx

Nigel

I dont think this is the case. Ill have a look at my previous payslips and get back to you!!!

CLAPTON

you only pay NI on the amount over 435 at 11% and not the entire amount.

papito

CLAPTON wrote: »

you only pay NI on the amount over 435 at 11% and not the entire amount.

wayoflife pls check your pay slip on this one too.

Milarky

CLAPTON wrote: »

you only pay NI on the amount over 435 at 11% and not the entire amount.

Yes, everyone is now only charged NI for the extra (or marginal) hours worked - earning over £435 per month. So anyone with a second job earning £440 in that job will only pay NI on £5 plus what they would be paying anyway in their old job. And likewise if it's your only job you only pay NI on the top £5 of income [Think: "like income tax but with[B] an allowance for each[/B] separate [B]employment[/B]"]

You need to be aware of the impact this will have on your eventual state pensions.

The implications are that you should try to earn at least £87pw or £377 per month 'Lower Earnings Limit' in each job. That way you can add the incomes together for benefit/future pension purposes. You'll note there is even a small range of income above the threshold (£435-£377 or £58 per month) where you actually pay no NI - but are still treated as 'contributing'

'N.I.' = 'Notional Insurance'