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Autumn 2003 Newsletter

This year, next year, NIC

For many years, there was an absolute maximum in the amount of National Insurance you were supposed to pay. If you had two jobs, or a job and a business, the normal rules would probably put you over that maximum - so it has been a routine procedure to apply for "deferment" of NIC. This meant that no NIC would be paid on one of your jobs, or on your self-employment, and the overall liability would be settled after the end of the tax year when all the figures were available.

The 1% extra NIC charge introduced in April applies to all your income from employment or self-employment, so there is now no maximum. This complicates the numbers, but the procedure of deferment is still the same as before. You defer everything except the 1% extra - that is payable on everything, so it can't be put off. Then the calculations cap the "normal" contributions - the 10% that employees pay, and the 7% that self-employed people pay, on earnings up to £30,940.

Anyone in employment will have felt the increase in NIC in their April pay-packet. It will only catch up with the self-employed when they settle up for 2003/04 on 31 January 2005 - but it will surely increase the payment due on that date.