Although these updates are now fewer and farther between, I appreciate that quite a number of our clients are still struggling - some even more so now that we are over the main "covid period". As mentioned before, I intend to keep these going for the foreseeable future to try and help clients as much as I can.
This update was first released on the 2 March 2022. Some of the information may be out of date, please check with your accountant.
I have had a lot of conversations with businesses over the last month or so about how to cope with the rising costs, rising/new taxes and our current economic climate. The best advice I can give is:
Today the government confirmed that there will be a new levy introduced to pay for the health and social care crisis that we are currently facing as a country. Although it has been announced as a simple 1.25% levy, there is a bit more to it.
From April 2022 there will be an additional 1.25% added on top of National Insurance. This is both to the employee and the employer and the self employed. This method of collecting it is temporary, because HMRC do not have the ability to get their systems in place.
Would you believe that HMRC’s systems and staff are not ready for a change that was rushed through? I know. Shocking.
Anyway, this time it is a problem with Class 2 National Insurance. As you will be aware from previous newsletters, HMRC have altered the way they collect NI from self-employed individuals. Instead of collecting the NI quarterly, it now gets added onto the tax return and paid with the tax bill in the following January.
Seems simple, right?
The Employment Allowance is increasing from £2,000 to £3,000 on the 6th April 2016. This is good news for employers, but bad news if you’re the only employee in a company, and also the director, as your company will no longer be eligible for the NICs Employment Allowance.
This means that if as a sole director you pay yourself £11,000 per year to make use of the personal allowance, then the company will pay just under £400 per year in Employer’s National Insurance.
No need to renew your SEE certificate
From April the current SEE arrangements will no longer apply. This means that there is no need to renew or apply for a SEE. All existing SEE certificates will cease to be valid from 11 April 2015.
Be Wary of Non-payment
This is because the collection of Class 2 NI is changing. Liability for Class 2 NICs will automatically be determined by the level of profits declared when a person files their Self Assessment return.
The Chancellor’s Autumn Statement took place on 3 December 2014. Here is a brief summary of the key points:
From the 6 April 2015, the rate of employer Class 1 secondary NICs for employees under the age of 21 will be 0% up to the new ‘Upper Secondary Threshold’ (UST) which will be the same as the Upper Earnings Limit (UEL) for 2015/16. Earnings above this threshold will have employers NIC applied to them as usual.
The NIC on expenses and benefits (Class 1A) are not affected by this change and should be collected and reported as normal.
In previous blogs I have discussed Class 2 NI contributions and how they are collected. The National Insurance Contributions Bill was published on 18 July 2014. It will introduce legislation (which was consulted on last year) to reform the collection of Class 2 NICs by enabling the self-employed to pay their Class 2 contributions through self-assessment alongside their income tax and Class 4 NICs.