Don't pay too much national insurance

National insurance borne by a shareholder-director in 2017/18 remains at 25.8%. That is the director as an employee will pay 12% while the company as employer will pay a further 13.8%.

If you have income from more than one job, or if you have self employment income as well as being employed, you should take care to ensure that you do not pay more in national insurance contributions than you need to.

The prescribed annual maximum normal contribution for an individual is 53 weeks at the standard primary (employee) Class 1 contribution rate between the earnings threshold and the upper earnings limit. For 2017/18 this works out to be £4,508.24. There is also an additional 2% payable on earnings in excess of the upper earnings limit.

Class 1 contributions

The Contributor Deferment Group will tell you for which employments they have allowed deferment of contributions and will send to the relevant employer(s) a certificate telling them not to deduct primary class 1 contributions from you during the tax year and asking them to refund any contributions they may already have deducted from your wages/salary during the year.

Class 2 contributions

If you expect your earnings from self employment to be less than the small earnings exception limit (£6,025 for 2017/18), you may apply for exception from paying class 2 contributions.

However you may, if you wish, continue to pay class 2 contributions voluntarily to keep up your entitlement to the benefits they provide (Incapacity Benefit, Retirement Pension, Widow's Benefit and Maternity Allowance).

Class 2 contributions may be deferred if you can show that you are otherwise likely to pay above the annual maximum normal contribution (£4,508.24 as set out above) in class 1 and class 2 contributions.

After the year end

After the end of the tax year, the deferment group will work out your overall contribution position for the year and collect any balance of contributions that may remain payable.

Contribution refunds

If you do not apply for deferment in time, it is still possible to claim a refund of overpaid national insurance contributions. The time limit for claiming is broadly six years after the end of the tax year in which the payment was made.

Please contact us if you would like further information or assistance in this area.

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SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
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If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com. Our new client services helpdesk is open Monday to Friday (8am to 6pm).

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*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.