national insurance

kiwiman

Hi, my daughter has just started a job working 2 days a week  earning £129, having previously been on universal credit.
Although she has been employed by the company she has been told she will have to pay income tax via self assessment.
I don't see this as being a major problem as the tax will be minimal if any at all.
Will she also have to make her own National Insurance contributions?

molerat

If she is genuinely self employed then yes she will have to sort her own NI out if it need paying.  But is she actually self employed ?  Many companies out there calling their employees self employed to avoid employer responsibilities. https://www.gov.uk/guidance/check-employment-status-for-tax

AskAsk

here is a link on self employment.  it states that you would have to pay national contributions class 2 and class 4

https://www.simplybusiness.co.uk/knowledge/articles/2020/06/going-self-employed-in-the-uk-a-self-employment-guide/

gov site states the limits for NI

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

kiwiman

Thanks for the replies, my concern is as stated by molerat, there is no definitive answer to whether she is employed or self employed. Does anyone know if she pays class 2 or class 4 she is entitled to a full pension when the time comes?

AskAsk

kiwiman said:

Thanks for the replies, my concern is as stated by molerat, there is no definitive answer to whether she is employed or self employed. Does anyone know if she pays class 2 or class 4 she is entitled to a full pension when the time comes?

as far as i understand, someone is employed if they can not work for anyone else.  as your daughter is only working 2 days a week, she could offer her services to someone else and so would be possible for being classed as self employed.  this link states that if she pays the necessary NI, she would be entitled to a full state pension when she gets to state pension age

https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed#:~:text=If you're self-employed you're entitled to,National Insurance (NI) record.&text=So it's crucial you plan,retirement income you'll need.

General_Grant

AskAsk said:

kiwiman said:

Thanks for the replies, my concern is as stated by molerat, there is no definitive answer to whether she is employed or self employed. Does anyone know if she pays class 2 or class 4 she is entitled to a full pension when the time comes?

as far as i understand, someone is employed if they can not work for anyone else.  as your daughter is only working 2 days a week, she could offer her services to someone else and so would be possible for being classed as self employed.  this link states that if she pays the necessary NI, she would be entitled to a full state pension when she gets to state pension age

https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed#:~:text=If you're self-employed you're entitled to,National Insurance (NI) record.&text=So it's crucial you plan,retirement income you'll need.

Someone can be employed and work for more than one organisation.  I think I may have been employed by up to three employers at the same time (not actually doing work at the same time, of course!).  So that's not an indicator.

However, if you are self-employed having only one client is definitely suspect.

OP - if your daughter has been employed by the company then she is an employee.  If she is being expected to deal with her own tax affairs, are they expecting her to submit invoices?  Does she have standard terms of business which she can give them saying, for example, that they have to pay within 14 days of the date of the invoice?

AskAsk

General_Grant said:

AskAsk said:

kiwiman said:

Thanks for the replies, my concern is as stated by molerat, there is no definitive answer to whether she is employed or self employed. Does anyone know if she pays class 2 or class 4 she is entitled to a full pension when the time comes?

as far as i understand, someone is employed if they can not work for anyone else.  as your daughter is only working 2 days a week, she could offer her services to someone else and so would be possible for being classed as self employed.  this link states that if she pays the necessary NI, she would be entitled to a full state pension when she gets to state pension age

https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed#:~:text=If you're self-employed you're entitled to,National Insurance (NI) record.&text=So it's crucial you plan,retirement income you'll need.

Someone can be employed and work for more than one organisation.  I think I may have been employed by up to three employers at the same time (not actually doing work at the same time, of course!).  So that's not an indicator.

However, if you are self-employed having only one client is definitely suspect.

OP - if your daughter has been employed by the company then she is an employee.  If she is being expected to deal with her own tax affairs, are they expecting her to submit invoices?  Does she have standard terms of business which she can give them saying, for example, that they have to pay within 14 days of the date of the invoice?

yes, you can have more than one job as an employee, but i think as long as you can work for more than one company, that is the employer is not stopping you working for anyone else and they are not employing you full time so that you would have no time to work for anyone else, then they can legitimately employ you on a self employed basis.

this is what i understand the situtation to be.  so for example, a company can employ a cleaner on a self employed basis if she only works for them for two days a week and the rest of the week, she can offer her services to other clients.  but if they employed her 5 days a week, then they would be considered to be dodgy if they claimed that they employed her on a self employed basis.

Dazed_and_C0nfused

kiwiman said:

Hi, my daughter has just started a job working 2 days a week  earning £129, having previously been on universal credit.
Although she has been employed by the company she has been told she will have to pay income tax via self assessment.
I don't see this as being a major problem as the tax will be minimal if any at all.
Will she also have to make her own National Insurance contributions?

So she hasn't got a job, she is running her own business.

Depending on her profit she will have to pay Class 2 and Class 4 National Insurance.

Depending on her State Pension provision she may wish to pay voluntarily Class 2 National Insurance even if none is strictly due.

kiwiman

Thanks again to everyone.
In the line of work she is in it would not be necessary to submit invoices. I guess as she is free to work elsewhere on other days, she is classed as self employed, and as such would have to submit her tax returns and pay N I through that.

General_Grant

kiwiman said:

Thanks again to everyone.
In the line of work she is in it would not be necessary to submit invoices. I guess as she is free to work elsewhere on other days, she is classed as self employed, and as such would have to submit her tax returns and pay N I through that.

So how will she be paid?  How will she be recording her income and expenses?  Is it cash in hand at the end of the day?
Being free to work elsewhere does not, of itself, mean she is self-employed.

Marcon

AskAsk said:

yes, you can have more than one job as an employee, but i think as long as you can work for more than one company, that is the employer is not stopping you working for anyone else and they are not employing you full time so that you would have no time to work for anyone else, then they can legitimately employ you on a self employed basis.

this is what i understand the situtation to be.  so for example, a company can employ a cleaner on a self employed basis if she only works for them for two days a week and the rest of the week, she can offer her services to other clients.  but if they employed her 5 days a week, then they would be considered to be dodgy if they claimed that they employed her on a self employed basis.

That's a possible indicator but certainly not a conclusive test. You can't 'employ' someone on a self employed basis; either you employ them or you don't! They can engage your services, but that's a different kettle of fish.

OP has said that her daughter has been told she is 'employed' by the company, and it may be nothing more sinister than crossed wires. If she is earning £129 a week (assuming that is the pay for both days, not £129 a day?), the her annual income from this job is way below the personal allowance threshold and below the level at which NI becomes payable. Is she being offered paid holidays, pension contributions etc - if either of those, then she is definitely not self employed.