The Government has announced that it will no longer accept retrospectively withdrawn regional National Insurance contributions (NICs). This means that employers who withdrew their NICs during the 2016/17 tax year will not be able to reclaim those payments.
If you are eligible for a refund, you will receive it within 12 months of submitting your completed application form. If you do not qualify for a refund, you can still apply for a repayment scheme.
Who can apply
The government has announced it will make it easier for sole traders, partnerships, property investors, trading charities and managed service companies to register for the 2017/18 tax year. This includes those businesses which are registered for VAT purposes.
Businesses that do not qualify for registration include sole traders, partnerships, limited liability partnerships, trusts and charitable organisations. These types of businesses will continue to be taxed according to the rules applicable to individuals.
New businesses can apply for the holidays if they meet the conditions outlined above. They must pay income tax on any profits made over the course of the year.
A full list of eligible businesses can be found here.
Businesses not considered to be new
The government recently announced that it plans to make changes to how businesses are classified under the Value Added Tax (VAT). This includes making sure that businesses that fall into one of three categories are no longer considered “new.”
According to the government, businesses that fit into these categories won’t need to submit a new NICs registration forms. However, they do need to apply for VAT.
These businesses include those that:
• Have been trading for less than five years;
• Are set up to provide goods or services to consumers, such as retail stores, restaurants, hotels, tour operators, etc.;
• Sell goods or services online.
– What are they? How do I determine my principal place of business?
If you run a business, you probably want to take advantage of the annual National Holiday Credit. This credit allows businesses to claim tax deductions based on the number of days their employees work during the year. For example, if you operate a retail store, your salespeople might spend most of their time working in one particular area of the store. In that case, it makes sense to consider that part of the store as your principal place of business.
The National Institute of Standards and Technology (NIST) defines “principal place of business” as the office where a person carries out the majority of his or her business activities. However, there are exceptions. You could have several offices, each carrying out different parts of your business. Or you could have multiple stores or branches within a single building.
For those of us who deal with taxes every day, we often hear terms like “business expenses,” “deductions,” “tax credits,” “depreciation,” and “capital gains.” But what exactly do they mean? And how do they relate to our personal finances?
Businesses and state aid
The NICs Holiday covers most types of state aid, including tax relief, grants, loans, subsidies and incentives. However, there are some exceptions. For example, it does not cover support for research and development activities, nor does it cover state aid that supports the purchase of equipment. In addition, the NICs Holiday does not cover state aid for the construction of buildings, such as schools, hospitals and sports facilities.
How to apply
To qualify for NICs holiday, businesses must be able to show that they are eligible. This includes being based in the UK, having been open for at least 12 months prior to the start date of the NICs holiday, and having fewer than 250 employees.
If you think your business might qualify, it’s worth checking whether you’re already registered with us. We’ll tell you if you’re eligible and how to register.
Employers can claim tax relief on National Insurance contributions (NICs) paid on qualifying employees. This includes anyone employed before 22 June 2011. If you have fewer than 10 qualifying employees, you can claim NICs on each one. However, there is no maximum limit on how many employees you can claim tax relief on. You must pay out the full amount of NICs on each qualifying employee.
Your first 10 qualifying employees could qualify for up to £20,500 of employer NICs. So, if you had 10 qualifying employees, you could potentially save £10,250.
The qualifying period depends on whether you employ more or less than 10 people and what type of employment you offer.
If you employ more than 10people, you can choose to use either the standard qualifying period or the extended qualifying period.
If you employ fewer than 10 people, you can choose to apply the standard qualifying period or a shorter qualifying period.
You cannot combine both types of qualifying period. For example, you cannot use the standard qualifying period for your first 10 employees and the longer qualifying period for the next 10.
To calculate the qualifying period, multiply the number of qualifying employees by the length of the qualifying period.
There are time constraints for filing a claim.
A retrospective claim can be made up to 4 years after the qualifying event occurred. If you are claiming benefits because you are disabled due to a work injury, you must file a claim no later than 3 months after the end of the period during which you became eligible to receive compensation. However, there are exceptions to this rule. You may be able to make a claim even though it is outside of the normal three month window if you meet one of the following conditions:
1. You did not know about the injury;
2. You had good reason to believe that you could not file a claim;
3. Your employer failed to provide medical care reasonably necessary for the treatment of the injury;
4. Your employer refused to pay for reasonable and necessary medical care; or
5. You filed a timely claim under another law.
The rules governing claims for disability pension do not change based on whether the injury occurred before, on, or after the date of the Act.
Calculating your claim
The National Insurance Contribution Scheme (NICs) holiday entitlement is calculated based on the number of days you worked during the tax year. This includes both paid and unpaid holidays. If you are self-employed, you must include any additional days you worked over the course of the year. You can use your payroll records to calculate your NICs holiday entitlement.
If you don’t know whether you qualify for a NICs holiday, it’s worth checking your pay slips. You might find that you haven’t been paying enough attention to your employment history. For example, you could have been employed for less than six months, but still think you’re entitled to a holiday because you didn’t receive any pay slips.
You can also check your pay slip online. When you log into HMRC Online, select the Employer tab and scroll down to the section titled ‘Employee Information’. Click on the link labelled ‘Payroll Records’. From here, you can see information such as the date of birth, address and contact details of each employee. You can also view the dates of employment and payment dates.
Once you have identified the relevant data, you can use the following formula to calculate your NICs entitlement:
Number of calendar days worked x Number of weeks worked Total number of days off work
Example: A person works 35 hours per week for five weeks. They therefore have 175 days off work.
NICs’ directors and annual profits review
The NICs holiday is one of those things you might forget about until it’s too late. As long as directors are aware of what they need to do to claim the NICs holiday, there shouldn’t be any problems. But if directors run into trouble, they can seek advice from a professional accountant.
NICs stands for New Income Tax Credit. This is a tax credit that allows individuals to reduce their taxable income by up to £1,200 per annum. It applies to both individuals and companies.
If you earn less than £50,000 per annum, you may be able to take advantage of the NICs holiday. You must be employed by the same employer throughout the whole tax year in order to qualify. If you work part-time, you won’t be eligible for the holiday.
You must be employed full-time throughout the whole tax year. So, if you spend half your working hours away from your main place of employment, you won’ t be able to benefit from the NICs holiday. However, you may be able use the holiday if you work at different places over the course of the year.
In addition, you must be paid at least the national living wage. For example, if you are paid £9 per hour, you must receive at least £10,440 per year in wages.
For most people, the NICs holiday is worth around £600. The amount depends on how much you earned throughout the year. If you didn’t make enough money to qualify for the holiday, you can try again next year.
If you want to find out whether you qualify for the NICs holiday, you can go online and look up your salary history. Alternatively, you can call HMRC on 0300 123 5000. They will ask you questions about your employment status and the number of hours worked each week.
Completing your NICs holiday end-of-year return
The New Zealand Income Tax Act requires employers to include employee NICs holidays in their annual salary packages. This includes paid public holidays, Christmas Day and Boxing Day. If you are unsure whether your employer pays for NICs holidays, check out our guide here.
If you don’t receive your NICs holiday pay, make sure you complete your tax return before 31 December. You can do this online via MySuper, or download the form and print it off.
Reviewing your payment record
If you are receiving a monthly statement from HMRC, it is likely that you have paid some tax during the previous month. You can check the status of your payments online.
The following information is required to make sure you pay the correct amount of tax:
• Your name
• Your National Insurance number
• The date you became eligible to receive income related benefits
• The amount of income related benefit you received in the previous month
You can find out how much tax you owe by logging into the Tax Calculator. This tool allows you to calculate what you owe based on the amounts shown on your statements.
The government wants employers to record information about their workers’ annual holidays. This includes whether they are entitled to paid time off, how much they’re owed, what days they’ve taken, and when they’ll be returning to work. Employers must retain records for three years after it becomes clear that no further claims will be made. They must also send out reminders to affected employees every six months.
Decisions and appeals
Employers are responsible for ensuring that their workers are correctly registered for NIC payments. This includes those who work within the UK and those working abroad.
Businesses should check their records frequently to make sure they are paying the correct amount of NICs. If you discover discrepancies, contact HMRC immediately.
Frequently Asked Questions
What if I earn less than the weekly/monthly minimum?
If you earn less than the weekly or monthly thresholds, you don’t pay any NIC. You’re still entitled to receive contributory benefits and the State Pension, though.
You’ll see this reflected in your records as ‘NIC credit’. However, it won’t affect what you contribute to the system, and you won’t get any benefit payments linked to it.
In some cases, you might get NI credited even though you don’t actually owe anything – for example, if someone else pays your NIC for you.
What if I work more than one job?
As well as paying tax on your second job, you might also have to pay NIC on that second income. But National Insurance operates in a very different way from income tax – and it could mean you get less money out of your earnings.
With tax there is a single, tax-free amount available for every individual per tax year. This is called the personal allowance. If you earn more than the personal allowance (£10,500 in 2020/21), you are taxed at 40%.
For National Insurance there is a different limit for each job. So if you work part-time, you will usually have a lower NI limit than someone working full-time.
The limits are:
£190 (from 6 April 2021 to 5 July 2022) or
£242 (from 6 July 2022 to 5 April 2024).