Budget 2014 – National Insurance Rates

The pre announced rates for National Insurance Contributions were not changed in the Budget announcements, although the Chancellor did announce that payments of class 2 NIC for the self employed would be brought within the self assessment system, and no longer be payable on a monthly or quarterly basis..

Self employed with earnings above £5,885 per annum will pay Class 2 NIC at a weekly rate of £2.75, and pay class 4 NIC at a rate of 9% on profits between £7,956 and £41,865. If profits are above this level the NIC charge will be levied at a rate of 2% of the profits.

Employees will pay Class 1 NIC at a rate of 12% on income above £153 per week, and 2% on any income in excess of £805 per week.

Employers will pay 13.8% Class1 NIC on all employment income paid to employees in excess of £153 per week.

 

National Insurance – £2,000 Employment Allowance

Announced in the 2013 Budget the 6 April 2014 will see the commencement of an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary National Insurance Liability. Businesses will therefore not have to pay any employer NIC payments until they have exceeded this £2,000 allowance.  This will be a valuable saving for the business community.

A further change will be introduced from April 2015 which will mean that no employers NIC payments will be required in relation to employees aged under 21. A previous announcement stated this would apply to those earning less than £813 per week, although in his speech the Chancellor said no NIC charge at all would apply for these young workers.. This will be available on existing employees as well as for those taking on new staff.

 

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Nov 20

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