National Insurance explained for self employed folk in the UK
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- Опубликовано: 19 июн 2024
- National Insurance or NI is one of those taxes that self employed folk often forget about. It's normally collected through Self Assessment as part of your tax return. In this video I'm explaining what National Insurance is, how much you can expect to pay as a self employed person and why you might want to consider paying it voluntarily!
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Thank you so much for making this video. Still relevant, still useful!
I got really confused recently, trying to understand why there were gaps in my N.I for self employed years as I was under the impression I'd 'voluntarily contributed' already. Even my accountant was confused and had a lengthy conversation with inland revenue! Thank you for clarifying that we all should at least try and pay class 2.
What an incredibly useful video! Thanks
Andy this is very informative!! Thank you very much! I follow you daily, I need to know these, as I am a migrant here!
Thank you Sabina! No worries and best of luck! 👍👊
Very useful! Thank you!
Very clear good video thank you.
Thank you so much for this. Fantastic information, really appreciate it.
No worries!
It's frightening how little tax gets taught in school. Even when I did my Level 3 in Business Admin and Accounting, tax and NI was barely mentioned! (Then again, I did go to Gateshead College so what do you expect)
It's probably not as bad for us as we have PAYE here, it's not like the US where everyone has to file their taxes every year
Yeah, par for the course (pardon the pun). I did my studies in sound engineering and never got shown how to use a mixing desk - just had to work it out for myself (Newcastle College). As you say, can't understand why the basics aren't taught in school! 👍
little? you mean not at all lol
@@jan-nn9ix Actually, we did have a whole maths lesson on tax! And we had an IT project where we had to make a spreadsheet to calculate tax, but that was about it!
Thank you for your video. It was very helpful!
I am an employee on PAYE. I work part time and I earn £12,000 a year.
I have also become a self employed tutor recently and I believe I will be earning £5,000-£10,000 a year.
Please can you let me know how national insurance works there?
do you have that NI and tax calculator anywhere on your page? thanks
im not sure when should i pay NI. I thought i would have to pay it together with tax, is that right? Or i need to pay it every week/month?
Thank you for the video, very informative! Can I ask if this is geared more towards sole-traders, and not limited companies with one employee?
Yes, Ltd companies don't pay class 4 or 2 NIC.
i just got stung for £1800 plus for class 4 nat ins, i ticked a box on the way through my self assessment for 20/21 ... i prefer to pay the £3 a week ... is there a way to claim back the class 4 .. or i need to pay class 4 NI to get my state pension? Does Class 2 cover state pension obligations?
You are very helpful! Many thanks! Do you know how can I pay voluntary NI?
I have small exterior property cleaning business but produce music on weekends - use to be full time job - now is only my hobby :-) cubase 10, love waves plugins and polish company PSP - thay have great mastering vst. Happy New Year from Poole!!!
Are you self employed? You do it through self assessment. If you're not self employed I think you can do it through Class 3 contributions. 👍
Hi thanks for your video which i benefits a lot and i learned many things. I have two questions, Q:1 I have worked for 30 and my pension age is coming 5 years early do i have to pay the 5 years voluntary?
Q:2 there is friends of me work same place and earns same of amounts but end of the year he received a cheque from a revenue with small amount of money which i have never received one, i call but the answer was am up today so i wont why?
Best NI video 👏👏🙏
Great work and nice material. It will be nice if you can explain how to pay gaps in contributions
for specific years. For example, I have to pay £ 30 in 2015 and £ 795 in 2017. I would like to pay only for 2015, but I don't know how to do it?
"You’ll need your 18 character reference number when you pay.
Where to find your Class 3 National Insurance reference number
You’ll find it on your bill."
What kind of bill? I have no any bill, no p60.
Form CA5601 does not allow me to choose only 1 year from the past to cover the gaps.
Thanks for help
I'm not sure you can do that - I would give HMRC a bell or have a chat with your accountant. 👍
Great video thanks for sharing your knowledge. I'm self employed in construction so on the CIS scheme. Just looked at my national insurance record and it shows for the past 3 years "You did not make any contributions this year" ????
Called the national insurance help line today on 0300 200 3500, they told me I'm not registered with them as being self employed and have not been paying class 2 insurance. I've got a bill now of nearly £400 covering 3 years. Hopefully this sorts it out.
Amazing breakdown of N.I, you're amazing! I have a simple question to ask about class 2: for someone who is in the process of starting a software business from home (selling software products through a website), and I'm currently unemployed, is there a benefit to registering as a sole trader at this point if I'm currently not earning?
From what I can figure out, you can (only) voluntary pay class 2 if you're registered as self employed, which is far cheaper than class 3 contributions, but the compromise is being responsible for the tax return process which seems like a fair deal. Is this assumption correct? Thank you!
Depends how old you are and how complete your NI record is. I wouldn't panic about missing the odd year unless you plan on taking early retirement. 👍😀
@@SmallBusinessToolbox Haha, I'm in my mid 20's and have a few years of class 1 contributions from a depressing office job I recently quit with the intent of going self-employed. I'm a software developer and will be selling VST plugins (something I think you'll be aware of based on the equipment I often see behind you lol).
Thanks again for creating such a great channel; your delivery, choice of topics, teaching style, video quality and dry humour are all spot-on.
Awesome - no worries and best of luck!
So how much Class 4 NIC do I pay?
You pay Class 4 NIC on your taxable self-employed profits. The NIC is paid in profit bands as follows (figures shown for 2019/20):
Profit band Class 4 NIC
Up to £8,632 nil
£8,632 up to £50,000 9%
Over £50,000 2%
Example
Frank has profits of £10,000 for the tax year 2019/20. His Class 4 NIC liability is calculated as follows:
First £8,632 @ 0% nil
On next £1,368 @ 9% £123.12
Total due £123.12
Hello Andy,
Long time viewer of all your RUclips channels.
I registered as self employed back in June and am running an Ebay store, it's very small at the moment, I've kept every receipt / invoice but I want to ask a few things please:
Many of my purchases as stock are second hand, say for example 10 items from a car boot sale so therefore I'm unable to acquire physical receipts as it's impractical so I've been writing my own receipts with total spend, date etc and itemising the cost of each individual item. Would this be acceptable? As I have no other way of proving it, I talk to people who run Ebay stores like me and they say they do the same and it's always been accepted.
Secondly, as I registered in june, am I correct in thinking my first tax return won't be until January 2021 for tax year 19/20?.
Lastly, I think I'd prefer using an accountant for the first time doing it as I don't want to make a mistake. I just wondered what costs are involved and do you pay an individual or a firm?.
I've kept every single record I can and will continue to do so. I just want to make sure I'm on top of it.
Hi George! Q1 - By "always been accepted" I very much doubt they've been through audit 😀. It's all down to how much HMRC want to push it and how far you're willing to go to fight your corner. If you buy a LOT from car boot sales perhaps take pics of the items and car reg. of sellers at the sales - wouldn't like to guarantee that would cut it though. You really need contact details of the sellers if you're doing this as a business.
Q2 - yup! Q3 - defo a good idea, sole trader accounts shouldn't be any more than about £200-300 per year if you're organised and don't just present your accountant with a box of receipts. 😉 I use an individual. Best of luck - sounds like you're on the ball! 👍
I have 2 government gateways, 1 for self-employment and my personal one. As I'm new to all this I didn't realize I was trying to find out my personal NI details with the wrong gateway number. Only after speaking to an advisor on the phone I was sent the right number and was able to check my NI contributions.
Interesting - didn't know you could have two! 🤔😂
the 'gateway' is a bit difficult to say the least
Is there any benefit to paying over the 35 years.... I'm at 35 years now so should I continue paying Class 2 despite if I'm above £6300 or not
Hi, I have a straightforward question. How can I register a self employment? On gov.uk I just found a self assessment website. Any helpful links much appreciated. Many thanks
Hi - that's basically it - you register for Self Assessment. See this vid for a bit more info: ruclips.net/video/hYdWyKIuwQM/видео.html 👍
Quick question I’ve just start a small online business ( online sales ) not earning mega money say around £200/£300 a week so I’m self employed can I pay tax & ni weekly/ monthly maybe a stupid question but new to all this
Am wondering the same aswell
Hello congratulations for your channel.
Do you know about self employed for pay tax, Trading bitcoins sell and Buy?
Thank you very much.
I can do it?
Buying and selling bitcoin is taxed under capital gains, as far as I know. Check with an accountant though. 👍
Great Video
Cheers Aziz 👍
Don't Class 4 NIC taken only fron taxable income if it over £8,632 ?
Yup - based on business profits. Covered that in the video... didn't I? 🤔
An effective 34% on 50 grand... yikes ! And that doesn't even account for the VAT
I presume that 50% is the retro-active payment due to the way you pre-pay taxes in the UK, and is only the first year of hitting the threshold ?
Fascinating to see how these -scams- schemes work in other countries.
Yeah, only for the first year though until you get your payments on account up and running. So you're basically paying your next year's tax bill in advance (50% in advance and 50% after 6 months). So it all balances out in the end and works out about 23% on £50k. 👍😀
@@SmallBusinessToolbox So.... in your last earning year do you not pay taxes on the last 6 month income ?
Basically yeah - there would probably be a final balancing payment to square everything up... or a rebate if you didn't earn as much as the previous year.
@@SmallBusinessToolbox Ah ok. Look forward to the video on it. Interesting stuff 👍
Reason for my question is I spent 4 years re-writing an accounting system with Coopers and Lybrand years ago, and this is what we'd call a one time tax advantage... in this case in the favour of the goobernment ;)
Ah wow! I'm nerdily interested in how this stuff works in different countries... just in case the Brexit thing goes horribly wrong 😂. On the flip side, if your tax bill is below £1000 then you've got 9 months to do your return and pay tax due (end of tax year is 5th April and tax return due by 31 Jan). Watch my vid on why the tax year is 5th April - that's really crazy. 😂
This is great but I think the world might end by the time I get a my state pension :( Seriously considering 'live fast, die young'
Interesting
👍👊
Hi, I had a small query regarding the 2018-2019 year tax returns. Ive emailed you, please get back to me when you can, I'd really appreciate it. Thanks
Hi - can't respond to specific questions on e-mail I'm afraid but if it's a general question do post it here. If I can't help hopefully someone else can! 👍
@@SmallBusinessToolbox Thanks for the reply. It was just regarding consequences for late registration as a sole trader. I missed the October 2019 deadline and also haven't done the self assessment which was due on the 31st of January 2020.
If this is your first year in business I would speak to an accountant as they can advise on the best course of action. Failing that give HMRC a bell - they're very helpful. Best of luck! 👍