Local accountants and tax advisers, Trueman Brown, warn taxpayers that they may have paid too much national insurance.

One consequence of the 2007-08 worldwide recession is that a large number of employees have seen no meaningful or, indeed, no increases in their wages rates for a number of years. To keep up with the rise in the cost of living, many employees have sought out a second income whether by taking on a second employment or operating a business as a self-employed person.

PROBLEM WITH BOTH EMPLOYED AND SELF EMPLOYED

One problem taxpayer who have two sources of employment income or income from both employment and self-employment is that they may be paying too much national insurance!

Corringham local nearby accountants too much ni

For any individual, the maximum national insurance contributions can be calculated as follows: –

  • 53 weeks at the standard (primary) Employee Class 1 Contribution Rate. (2022/23: 13.25%) between the earnings threshold (2022/23: £190 per week between 6 April 2022 and 5 July 2022 and £242 per week between 6 July 2022 and 5 April 2023) and upper earnings limit (2022/23: £967 per week). and
  • A further 3.25% payable on earnings above the upper earnings limit.

HOW TO CORRECT OVERPAYMENT

If you think that there is a chance of exceeding this limit, then the taxpayer has two choices of correcting any anomaly: –

1. Form CA72A

The taxpayer can apply to HMRC to defer contributions on the surplus employments and/or self-employments.

 

If the taxpayer has more than one employment, they need to apply by completing and forwarding the Form CA72A to HMRC.

Although for 2022/23, the application should have been made before 5th April 2022, HMRC will accept applications up to 14th February 2023.

HMRC will then inform the taxpayer which employment(s) deferment has been granted.

A certificate is also sent to the employer asking them not to deduct primary contributions from the taxpayer and to refund any contributions that have already been deducted during the fiscal year.

At the end of the tax year, HMRC will calculate the national insurance contributions liability for the year and collect any balance due.

If the taxpayer is both employed and self-employed, there is no need to apply for deferment. This will now be dealt with through the self-assessment regime.

2. Claim

If the taxpayer fails to apply for deferment, then they can still claim back overpaid national insurance contributions from HMRC. The time limit is broadly six years after the fiscal year in which the payment is made.

Local accountants and tax advisers, Trueman Brown, are accountants that specialize in dealing with small businesses. If we are local and nearby to you and if you need advice, then please contact us below.