“I haven’t paid any National Insurance?”
Firstly, you might be wondering what, actually, National Insurance is. We outline the answer to this over in this blog.
Clients who are Self Employed, Sole Traders or Limited Company owners ask us this all the time.
Are you Self Employed/A Sole Trader?
There could be a number of reasons for this, such as:
- You haven’t earned enough – you must have earnings over approximately (depending on the tax year) £8.6k in a year to pay your main contributions of ‘Class 4’.At around 6.5k a year you pay a little amount of ‘Class 2’ as well (~£150 a year).
- You have paid it but you didn’t realise it is all one bill with your tax now.
For many years self-employed or sole traders used to pay the small amount of Class 2 (often referred to as ‘stamp’) each week or month.
This stopped a few years ago.
Are you a Limited Company Owner?
Its quite possible you are correct – you haven’t!
This is because there is a ‘sweet spot’ in the level of earnings you can be paid under ‘PAYE’ salary.
When you are paid between around £6.1k– £8.6k a year (roughly, depending on the tax year), you will get credit as if you had paid national insurance, but without handing over any physical money.
In typically efficient tax planning, so this is a very common strategy!
If you’re still unsure about if you have or haven’t paid National Insurance, and need to check if you should be, don’t hesitate to get in touch with us.