Most people who work have to pay national insurance contributions (NICs) as well as tax. NICs are collected by HM Revenue & Customs (HMRC). There are six classes of NICs, the most common of which are:
- class 1: paid by people who work as employed earners, and their employers
- class 2 and class 4: paid by self-employed people.
How to pay: for employers, NIC payments are paid to HMRC in the same way as income tax deductions.
HMRC recommends making payments by electronic transfer, including direct debit, Bacs and internet or telephone banking.
Large employers (250 or more employees) must make their payments electronically and these must be made no later than the 22nd of each month. The same date applies to medium-sized (between 50 and 249 employees) and small employers (fewer than 50 employees) who pay electronically.
If payments are made by post, cleared payment must reach HMRC no later than 19th of the month.
Most self-employed people pay Class 2 NICs at a weekly rate of £2.70 (2013-14 tax year). These are paid to HMRC either monthly by direct debit or by quarterly bill.
For more information, visit http://www.hmrc.gov.uk/ni/intro/basics.htm
To find out more about AGS accountants in the West Midlands and our tax services, please contact us