National Insurance Contributions
Both the employed, and the self-employed who pay Class 4 contributions, will be able to earn up to £9,500 in 2020/21 before NICs announced the Budget of 2020.
If you employer a veteran, then a new National insurance “holiday” is being introduced for the first year of civilian employment.
National Insurance rates for 2020/21 are remaining the same.
Employed 2019/20 Employed 2020/21
How much you earn Class 1 rate How much you earn Class 1 rate
Less than £8,632 0% Less than £9,500 0%
£8,632 – £50,000 12% £9,500 – £50,000 12%
More than £50,000 2% More than £50,000 2%
Self Employed 2019/20 Self Employed 2020/21
How much you earn Class 2 & 4 rates How much you earn Class 2 & 4 rates
Less than £6,365 0% Less than £6,475 0%
£6,365 – £8,632 £3 per wk (Class 2) £6,475 – £9,500 £3.05 per wk
£8,632 – £50,000 9% + £3 per wk £9,500 – £50,000 9% + £3.05 per wk
More than £50,000 2% + £3 per wk More than £50,000 2% + £3.05 per wk
Employment Allowance Scheme
The Employment Allowance scheme (introduced in 2014) was to allow certain businesses who employ staff to reduce their National Insurance Class 1 bill by £3,000 and claimed via payroll.
From 6 April 2020 the Employers Allowance will increase to £4,000 but will only be available to smaller businesses with an employer’s NI bill of £100,000 or less in the previous tax year.
If your business is part of a group of companies or has related companies under the same control, only one company in the group can claim the allowance.
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Tax Protection
With HMRC becoming more spontaneous with tax investigations we strongly suggest that every business is insured against the cost of investigation. So strongly in fact, that we automatically build it in to our fixed fee agreements. Many of our clients have been very grateful for this insurance when HMRC have come knocking.
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