NI contributions

[Maxdude6]

Hi, appologies in advance for my novice level of knowledge but just wanted to check by with anyone that may be in a similar boat with regards new NI contributions. I am a LtD Co., only employee of company, and my NI has gone from £38 per quarter to £458 per quarter. I was aware of the change in threshold and % increase, but this seems an astronomical increase. My salary has not changed from previous tax year. Any reassurance or advice much appreciated.

 

[DWS]

Hi, appologies in advance for my novice level of knowledge but just wanted to check by with anyone that may be in a similar boat with regards new NI contributions. I am a LtD Co., only employee of company, and my NI has gone from £38 per quarter to £458 per quarter. I was aware of the change in threshold and % increase, but this seems an astronomical increase. My salary has not changed from previous tax year. Any reassurance or advice much appreciated.

Hard to say if the figures you state are correct without knowing how much you pay yourself in salary.
However I would guess that it is Employers National Insurance that you are paying higher than last year as the threshold was reduced to £5K and anything above that subject to 15% in Employers NIC.

 

[Maxdude6]

Hard to say if the figures you state are correct without knowing how much you pay yourself in salary.
However I would guess that it is Employers National Insurance that you are paying higher than last year as the threshold was reduced to £5K and anything above that subject to 15% in Employers NIC.

Thanks for your reply. I pay myself the minimum, as my accountant suggests, is it £12,500, something like that. But to get over 1000% increase in what I have to pay in NI seems insane, and I mayas well pack in my business of 20years. So sad.

 

[DWS]

Thanks for your reply. I pay myself the minimum, as my accountant suggests, is it £12,500, something like that. But to get over 1000% increase in what I have to pay in NI seems insane, and I mayas well pack in my business of 20years. So sad.

Not sure how you are paying £458 a quarter which equals £1,832.
If you are only getting a salary of £12,570 then you should only be paying £1,135 in Employers NIC for the year.

 

[MyAccountantOnline]

Hi, appologies in advance for my novice level of knowledge but just wanted to check by with anyone that may be in a similar boat with regards new NI contributions. I am a LtD Co., only employee of company, and my NI has gone from £38 per quarter to £458 per quarter. I was aware of the change in threshold and % increase, but this seems an astronomical increase. My salary has not changed from previous tax year. Any reassurance or advice much appreciated.

NIC have increased.

What I suspect you are seeing as a director on a salary of £12,570 is the NIC payable towards the end of the tax year. As NI is based on your cumulative salary for the tax year to date you start paying NI when your salary reaches the NI threshold. I'd expect to see about £157 per month which is close to your payment for 3 months.

If you are concerned do ask your accountant - it's what you pay them for.

You can reduce your salary so that you pay no NIC but it may not maximise tax savings. Again a question for your accountant.

 

[Newchodge]

do you run payroll every month?

 

[Paul Kelly ICHYB]

Is the increase a combination of employer & employee contributions?

 

[MyAccountantOnline]

Is the increase a combination of employer & employee contributions?

It shouldn't be on a salary of no more than £12,570 for this tax year.

 

[Maxdude6]

Thanks for all your helpful replies guys. Accountant has explained a bit more for me, it’s a hit I am going to have to suck up but it is somewhat damaging, I’m only a small business and it’s a very hard hit to take.

 

[WaveJumper]

Be helpful for members I think if you expanded on the "why" your accountant has said you need to take the hit

 

[DWS]

Thanks for all your helpful replies guys. Accountant has explained a bit more for me, it’s a hit I am going to have to suck up but it is somewhat damaging, I’m only a small business and it’s a very hard hit to take.

If it is indeed the change to the Employers NIC threshold then your Accountant should really have explained these changes to you a long time ago and gave you the options to reduce your salary to avoid this if you so desired, there were quite a few different scenarios depending on each individual Companies circumstances to be considered, for example one being to take on a short term employee.

 

[Maxdude6]

If it is indeed the change to the Employers NIC threshold then your Accountant should really have explained these changes to you a long time ago and gave you the options to reduce your salary to avoid this if you so desired, there were quite a few different scenarios depending on each individual Companies circumstances to be considered, for example one being to take on a short term employee.

Yes very true, I am going to employ my daughter as you suggest.

 

[DWS]

Yes very true, I am going to employ my daughter as you suggest.

Please run this through with your Accountant first, they will have a better understanding of your Company’s circumstances rather then posters on here.
Also there are anti-avoidance rules that would need to be considered.

 

[Maxdude6]

Please run this through with your Accountant first, they will have a better understanding of your Company’s circumstances rather then posters on here.
Also there are anti-avoidance rules that would need to be considered.

100%, I always would. Thanks, nonetheless.

 

[Newchodge]

Yes very true, I am going to employ my daughter as you suggest.

Don't forget you will need employer's liability insurance

 

[Maxdude6]

Don't forget you will need employer's liability insurance

Already in place. Thanks.