Audley Financial Training National Insurance 2019/2020 30/06/2019 Audley Financial Training

Income Tax v National Insurance Income tax taxes all income Calculated on an annual basis Same rates for everyone Rate increases as income rises Income from different jobs are combined Carries on after State Pension Age NI is paid on employed and self- employed earnings Calculated on a pay period basis Different rates for employed and self-employed The amount that is paid at standard rate is capped The rate drops from 12% to 2% Each job is assessed separately Stops at State Pension age 30/06/2019 Audley Financial Training

Audley Financial Training Class 1 Weekly basis Above £962 Class 1 payable at 2% Between £166 & £892 (upper Earnings Limit) Class 1 payable at 12% Primary Threshold £166. No NIC but Credit for BSP LEL £118 NO NIC No credit for BSP 30/06/2019 Audley Financial Training

Audley Financial Training Calculation Sam earns £1,000 a week Standard rate £892 less £166 = £726 £726 @ 12% = £87.12 Upper rate £1,000 less £892 = £108 £108 @ 2%= £2.16 Total £87.12 + £2.16 = £89.28 30/06/2019 Audley Financial Training

Audley Financial Training Sam gets another job Second job pays £200 a week £200 less £166 = £34 £34 @ 2% = 68p Third job earns £100 a week No NIC 30/06/2019 Audley Financial Training

Audley Financial Training NIC – SELF EMPLOYED Class 2 flat rate – £3.00 per week small earnings exemption – £6,365 Class 4 9% on profits between £8,632 and £50,000 2% on all profits over £50,000 Paid as part of self assessment 30/06/2019 Audley Financial Training

A self–employed calculation Julie is self employed and has profits of £60,000 Class 2: 52 x £3 = £156 Class 4 £50,000 less £8,632 = £41,368 £41,368 @ 9% = £3,723.12 £60,000 less £50,000 = £10,000 £10,000 @ 2% = £200 30/06/2019 Audley Financial Training

Employed & self employed Kate is employed and earns £60,000 She also lectures on a self-employed basis with profits of £10,000 She has paid the maximum of Class 1 NIC so is exempt from class 2 Class 4 £10,000 less £8,632 = £1,368 £1,368 @ 2% = £27.36 30/06/2019 Audley Financial Training