NIC Calculation ??

[bhargavarajud]

I got little confusion on NIC calculation from both Employers’ and Employee’s side. Basically I was a permanent employee in a company when the 2013-14 tax year started i.e. on 6th April 13. On 10th of May I have come out of my work and took gap of 5 months. I was travelling at this time. And in October I returned back to UK and started working as a Contractor. So, I formed a limited company with myself as a Director. Now it’s time for me to think of paying myself salary and so comes the question of national insurance. I checked the HMRC website which gives the rate and income ranges. All the ranges are based on weekly income. For eg- it says employee’s NI contribution 12% of Income if weekly income is between £149 and £770.

Here comes my question. How do we calculate the weekly income. Do I need to take the whole salary I would be getting in FY 2013-14 (including the salary what I got as a permanent employee in May) and divide it by 52 weeks to arrive at income per week? Or is it just for the weeks I worked? I would be paying less NI in the first case as less income per week.

Any idea what is actually as per law, guys?

Best Regards
Bhargava

[northernladuk]

Time to get yourself an accountant.

[MPwannadecentincome]

similar thing happened to me - was a permie until made redundant in May then took 'til Aug to get a gig.

Calculation is based on week number in year vs total to date in tax year of income and tax and NI paid.

If you have Ltd co and have appointed accountant get them to do the calculation.

If you haven't appointed accountant - good luck cuz you might get help here with the first question but not if you keep asking on these forums.

[Greg@CapitalCity]

Here comes my question. How do we calculate the weekly income. Do I need to take the whole salary I would be getting in FY 2013-14 (including the salary what I got as a permanent employee in May) and divide it by 52 weeks to arrive at income per week? Or is it just for the weeks I worked? I would be paying less NI in the first case as less income per week.

If you want to pay yourself a salary that keeps you under the NI threshold, then take the date you were appointed Director, and use page 35 of http://www.hmrc.gov.uk/nitables/ca44.pdf - read across to the 'pro rata annual ST' column to get your salary. That is what you should pay yourself through your company for the rest of the year. If you go higher you will incur NIC, however the offset of company tax may make that worthwhile. Run a few scenarios past your accountant.