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

2. 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

3. 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

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

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

6. 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

7. 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
9% = £3,723.12
£60,000 less £50,000 = £10,000
2% = £200
30/06/2019
Audley Financial Training

8. 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
2% = £27.36
30/06/2019
Audley Financial Training