Simple National Insurance Question...

[paulee]

I am a contractor and have been given a spreadsheet providing me with the gains to be made in salary by working through a limited company service provider compared to the PAYE option.

They have provided a breakdown of the different national insurance rates and limits.

I would assume that the weekly limits would simply be multiplied by 52 in order to give me the annual limits, and multiplied by 52 and divided by 12 to give me the monthly limits.

However, this does not seem to be so.

Are NI limits (eg for employees' primary class 1 rate - 11% of £91.01-£610) more complicated than I first imagined, or is it simply a straight forward application of multiplying the weekly limits by 52 to get an annual limit, and multiplying by 52 and then dividing by 12, to get a monthly limit?

Thanks in advance

[Matt E]

On the NIC query, if the numbers are correct, you should be able to multiply by 52 to get the annual amount.

I've seen a few of these Contractor spreadsheets, and you need to be very careful about the numbers on them. Most of them work on you working 40 hours per week for 48 weeks per year. Ask them to clarify the calculation, and they should be able to generate an accurate calculation based on your circumstances.

Pay particular care if it is a company that uses business expense claims to reduce the tax liability - you need to be sure that your facts would actually enable you to make these claims. Eg if you live and work in London, you won't be able to claim business mileage claims, despite what the man in the street might say about using, for example, a parents address to claim substantial business travel expenses. The latest Tax Bulletin indicates that the Inland Revenue plan to look closely at them in this respect.

Regards

Matt
ms.evans@virgin.net