Too much NIC?

If you have more than one employment, or an employment and a self-employment, you could end up paying too much in National Insurance Contributions (NICs).

Everyone has a zero rate band where no NICs are paid. This is up to £7,755 for 2013/14. So if your second job or self-employment produces income within that zero band, you don’t really have a problem (although you may have to pay Class 2 NICs at £2.70 per week if you are self-employed as well as employed). The zero threshold for Class 2 NICs is £5,725 (for 2013/14), and if your profits are below that threshold, you have to apply for exemption rather than getting it automatically.

Big overpayments of NICs can occur if both of your jobs bring in income over £7,755. In that case, you could be paying the higher rate of NICs (12% for employees, 9% for self-employed) on income from both jobs. To avoid this happening you can apply to ‘defer’ NICs on one job, and pay the correct NIC on the combined income after the end of the tax year. This limit may already be applied correctly, but it’s worth checking.

Your deferment application needs to be sent to HMRC before the start of the tax year. It’s always easier not to pay NIC than to get it back after overpaying!

Posted in News.