N is for national insurance - A to Z Accountancy Top Tips
There are different classes of national insurance that you may pay depending on your source of income.
If you are self-employed you may pay Class 2 and Class 4 national insurance.
Class 2 is a flat rate for self employed which used to be paid monthly however since 2016 this has been paid annually as part of your tax return.
Class 4 is paid as a % of the profits you make. This is currently at 9% in the lower rate and then 2% in the upper rates.
Employees (including directors who have a salary) pay Class 1 national insurance which is deducted from your gross pay in your payroll. Employers also pay national insurance for employees. These both are dependant on the level of salaries.
Some Employers may be eligible for employment allowance which in the 2021/22 tax year can reduce their annual national insurance bill by up to £4,000.
National insurance often causes much confusion, so if you are unsure what national insurances you will need to pay as an individual or an employer or would like to know if you are eligible for the employment allowance then please get in touch for a free chat.