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Call us on 0190 864 9895| Section::National Insurance |
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Essential
Essential Insurance for Contractors
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National Insurance for tax year 2000/2001 Recap National Insurance is a deduction from earnings ostensibly used to fund toward the provision of various State benefits such as the State Pension, NHS treatment and welfare payments. In reality, it is simply another tax on income, albeit under a different guise.What is it levied upon? NI is deducted from earnings arising from employment. For employees, essentially it is applied to salary and most taxable benefits (eg a company car). For the self employed the deduction is from the profits of trade. Unearned income, such as bank interest or dividends, does not attract NI.Who pays it? For the purposes of Contracting, we can ignore self-employment. This leaves 2 parties liable to NI in any normal situation: the employer and the employee.What are the rates? The rates differ for Employers and Employees. Note that the Employer's liability is open ended. Also of key importance is that if you trade via your own Limited Company: you are effectively Employer and Employee. Yes, that means if you have your own company you pay both. Rates for Employers
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