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National Insurance Contributions (NICs) are payments which enable an individual to qualify for certain types of social security benefit. Without a full contribution record, an individual may not qualify for a full basic state retirement pension and, in extreme circumstances, may not qualify for any state pension at all. Other benefits such as children's allowance are also dependant upon the contribution record.
There are six classes of contributions for employed persons and three classes for self-employed persons. All categories are tied to the level of remuneration or profits of the taxpayer.
What do you need to do?
As an employer, you are responsible for calculating the correct amount of NICs due in respect of each employee. Not only does the employee pay contributions, but as the employer you must also pay NICs in respect of your employees' salaries.
You will need to be aware of the various allowances and limits that exist and how to deal with special cases such as individuals with more than one employment, overseas employment and company directors.
There are deadlines for forms to be submitted and for payments to be made. Penalties may apply if you miss these deadlines.
How can Grant Thornton help?
Many employers still tend to overlook NICs when considering business costs. They do so at their peril. The Inland Revenue, which deals with the day-to-day operation of NIC matters, has hardened its attitude and is becoming more efficient at collecting contributions.
We have specialists who deal with such matters on a daily basis. We also have the resources to save you valuable time and effort.
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