Entitlement to carer’s allowance

Carer’s credit is a National Insurance credit that can help carers to fill gaps in their National Insurance record. Carers who don’t qualify for Carer’s Allowance may qualify for Carer’s Credit. This may also help carers increase their State Pension entitlement.

The Carer’s Credit is available to qualifying applicants caring for one or more people for at least 20 hours per week. A carer’s income, savings or investments do not affect their eligibility for Carer’s Credit. The carer must also be aged 16 or over and under the State Pension age to qualify.

The person the carer is looking after must usually receive one of the following benefits:

  • Personal Independence Payment – daily living component
  • Disability Living Allowance – the middle or highest care rate
  • Attendance Allowance
  • Constant Attendance Allowance at or above the normal maximum rate with an Industrial Injuries Disablement Benefit
  • Constant Attendance Allowance at the basic (full day) rate with a War Disablement Pension
  • Armed Forces Independence Payment
  • Child Disability Payment – the middle or highest care rate
  • Adult Disability Payment – daily living component at the standard or enhanced rate

If the person being cared for is not receiving one of the qualifying benefits, the Department for Work and Pensions (DWP) will consider whether the level of care provided is appropriate to still qualify for Carer's Credit. The DWP will usually consider the level of care as appropriate if there is a signed care certificate confirming this from a health or social care professional. 

Source:HM Revenue & Customs | 25-03-2024

Check your National Insurance record

There is an online service available on HMRC to check your National Insurance Contributions (NIC) record online. The service is available at https://www.gov.uk/check-national-insurance-record

In order to use this service, you will need to have a Government Gateway account. If you do not have an account, you can apply to set one up online.

By signing in to the 'Check your National Insurance record' service you will also activate your personal tax account if you have not already done so. HMRC’s personal tax account can also be used to complete a variety of tasks in real time such as claiming a tax refund, updating your address and completing your self-assessment return.

Your National Insurance record online will let you see:

  • What you have paid, up to the start of the current tax year (6 April 2023).
  • Any National Insurance credits you have received.
  • If gaps in contributions or credits mean some years do not count towards your State Pension (they are not 'qualifying years')
  • If you can pay voluntary contributions to fill any gaps and how much this will cost

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension. If you would like to discuss this further, please do not hesitate to be in touch.

Source:HM Revenue & Customs | 18-03-2024

Spring Budget 2024 – NIC changes

As had been widely expected, the Chancellor announced further changes to National Insurance contributions (NIC) rates for employees and the self-employed.

There will be a further 2% cut in the main rate of Employee National Insurance from 6 April 2024. This will see Class 1 NICs reduced by 2% from 10% to 8%. This is on top of the earlier reduction, announced as part of the Autumn Statement measures, which reduced Class 1 NICs from 12% to 10% on 6 January 2024. When both of these changes are taken together, the Treasury say this will save the average worker on £35,400 over £900 a year.

The Chancellor also announced that the main rate of self-employed National Insurance, Class 4 NICs, on all earnings between £12,570 and £50,270 will be cut by a further 2%, from 8% to 6% from April 2024.

This is in addition to the previous announcement in the Autumn Statement that the current rate of Class 4 NICs would be reduced from the current 9% to 8% from 6 April 2024. Taken together this means that the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6% from next month. Combined with the previously announced abolition of the requirement to pay Class 2 NICs from 6 April 2024, this will save an average self-employed person making profits of £28,000 approximately £650 NIC a year.

Taken together these cuts mean:

  • A hard-working family with two earners on the average salary of £35,400 each will be better off by £1,826.
  • An average full-time nurse on £38,900 will be better off by £1,053.
  • A senior nurse with five years experience on £42,618 will be better off by £1,202.
  • The average police officer on £44,300 will be better off by £1,270.
  • A cleaner working night shifts on £21,058 will be better off by £340.
  • A typical junior doctor on £65,000 will be better off by £1,508.
  • A typical self-employed plumber on £34,361 will be better off by £846.
  • The typical teacher on £44,300 will be better off by over £1,270.
Source:HM Treasury | 05-03-2024

What is Class 1A NIC?

Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. Class 1A NICs are also due on charge on termination awards above a £30,000 threshold that have not already been subjected to Class 1 NICs deductions. There’s no employee contribution payable for Class 1A NICs.

Class 1A NICs are due in respect of most benefits provided to:

  • directors and certain other persons in controlling positions;
  • employees; and
  • members of the family or households of the above.

Where a benefit is provided as part of salary sacrifice or other optional remuneration arrangement (OpRA), special rules apply and the Class 1A NICs are calculated as a percentage of the relevant amount.

Certain conditions must apply before Class 1A NICs are due. These conditions are that the:

  • benefit must be from, or by reason of, an employee's employment and must be chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003;
  • employment must be 'employed earner’s employment' under social security law and employment as a director or an employee;
  • benefit must not already attract a Class 1 NICs liability.

There is a statutory exemption for qualifying trivial benefits in kind costing £50 or less in kind. The tax-free exemption applies to small non-cash benefits like a bottle of wine, or a bouquet of flowers given occasionally to employees or any other BiK classed as 'trivial' that falls within the exemption. An annual cap of £300 is applicable for directors or other office-holders of close companies and to members of their families or households.

Source:HM Revenue & Customs | 11-02-2024

Filling gaps in National Insurance record

National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the number of qualifying years of National Insurance contributions and which can increase the amount of benefits a person is entitled to, such as the State Pension.

This could happen if someone were:

  • employed but had low earnings;
  • unemployed and were not claiming benefits;
  • self-employed but did not pay contributions because of small profits; and
  • living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance credit. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may also be able to pay voluntary contributions to fill any gaps if they are eligible.

Source:HM Revenue & Customs | 30-10-2023

Checking your National Insurance record

HMRC offers an online service to check your National Insurance Contributions (NIC) record online. In order to use the service, you will need to have a Government Gateway account. If you don't have an account, you can apply to set one up online.

By signing in to the 'Check your National Insurance record' service you will also activate your personal tax account if you have not previously done so. HMRC’s personal tax account can be used to complete a variety of tasks in real time, such as claiming a tax refund, updating your address and completing your Self-Assessment return.

Your National Insurance record online will let you see:

  • What you have paid, up to the start of the current tax year (6 April 2023).
  • Any National Insurance credits you’ve received.
  • If gaps in contributions or credits mean some years don’t count towards your State Pension (they aren't 'qualifying years').
  • If you can pay voluntary contributions to fill any gaps and how much this will cost.

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension. 

Source:HM Revenue & Customs| 11-09-2023
national insurance contributions for self-employed; wimbledon accountant

Class 2 and Class 4 NICs: Quick Reference for Self-Employed Individuals in the UK

How to claim work from home tax relief in the UK

When you’re self-employed in the UK, understanding your National Insurance contributions (NICs) is critical for both compliance and for securing your future benefits such as the State Pension. For the 2023-24 tax year, the HMRC highlights two primary classes of NICs that self-employed individuals need to be familiar with: Class 2 NICs and Class 4 NICs. Here’s a quick reference of what these contributions mean for you.

What are Class 2 NICs?

Class 2 National Insurance Contributions are payable by almost all self-employed individuals. However, if you earn under the Small Profits Threshold (SPT), which is currently set at £6,725 for the 2023-24 tax year, you are exempt from these payments.

Key Features:

  • Rate: The flat weekly rate for Class 2 NICs is £3.45.
  • Benefits: Payments count towards the basic State Pension, employment and support allowance, maternity allowance, and bereavement benefits.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What are Class 4 NICs?

If you’re self-employed and your annual profits exceed £12,570, you’re also required to pay Class 4 NICs in addition to Class 2 NICs.

Key Features:

  • Rates: Class 4 NIC rates for 2023-24 are 9% on chargeable profits between £12,570 and £50,270. An additional 2% is payable on any profits over £50,270.

are you exempt?

There are a few professions where Class 2 NICs are not applicable. These include:

  • Examiners, moderators, invigilators, and people who set exam questions.
  • People who run businesses involving land or property.
  • Ministers of religion who do not receive a salary or stipend.
  • Individuals making investments for themselves or others, but not as a business and without a fee or commission.

If you belong to any of these categories, it may be beneficial for you to get a State Pension forecast and consider making voluntary Class 2 NICs to make up for missing years.

Next steps

  1. Calculate Your Earnings:
    Verify if you cross the Small Profits Threshold or the £12,570 limit for Class 4 NICs.
  2. Check Exemptions:
    Ensure that you don’t fall under any of the categories that are exempt from Class 2 NICs.
  3. State Pension Forecast:
    It’s wise to check your State Pension forecast to understand how your NICs impact your future benefits.
  4. Consult an Expert:
    Given the intricacies, it might be beneficial to consult with a tax advisor or accounting professional to help you navigate the NIC landscape.

Understanding your National Insurance contributions is vital for financial planning and fulfilling your tax obligations. If you have more questions about how these classes apply to your situation, feel free to get in touch with us.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Class 2 and 4 NIC for the self-employed

There are two types of National Insurance contributions (NICs) payable by most self-employed people. These are known as Class 2 NICs and Class 4 NICs.

Class 2 NICs are paid by all self-employed taxpayers unless they earn under the Small Profits Threshold (SPT), currently £6,725, which remove the necessity to pay NICs. Class 2 NICs are currently payable at a flat weekly rate of £3.45 for the 2023-24 tax year. Class 2 NICs count towards payments such as the basic State Pension, the employment and support allowance, maternity allowance and bereavement benefits.

In addition, most self-employed people are also required to pay Class 4 NICs. The self-employed are required to pay Class 4 NICs (as well as to Class 2 NICs) if their profits are £12,570 or more a year. Class 4 NIC rates for the tax year 2023-24 are 9% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270.

There is also a specific list of jobs where class 2 NICs are not payable. These are:

  • examiners, moderators, invigilators and people who set exam questions;
  • people who run businesses involving land or property;
  • ministers of religion who do not receive a salary or stipend; and
  • people who make investments for themselves or others – but not as a business and without getting a fee or commission.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether to make voluntary Class 2 NICs to make up missing years.

Source:HM Revenue & Customs| 21-08-2023

Filling gaps in your NIC record

National Insurance credits can help qualifying applicants fill gaps in their National Insurance record. This can assist taxpayers in building up the number of qualifying years of National Insurance contributions and which can also increase the amount of benefits a person is entitled to, such as the State Pension.

This could happen if someone was:

  • employed but had low earnings;
  • unemployed and were not claiming benefits;
  • self-employed but did not pay contributions because of small profits; or
  • living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore not paying National Insurance credits. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may be able to pay voluntary contributions to fill any gaps if they are eligible.

Source:HM Revenue & Customs| 03-07-2023

National Insurance credits

QUICK READS: NATIONAL INSURANCE CREDITS

At CIGMA Accounting, we understand the complexity of the UK’s National Insurance system and the value of optimising your benefits. This article explains National Insurance credits, a crucial element that can help build your National Insurance record and ultimately increase the entitlements you receive, including the State Pension.

National Insurance credits provide an invaluable lifeline for those not currently working, and thus, not contributing to their National Insurance. These credits can fill gaps in your National Insurance record, and we see it especially relevant to those who are job-seeking, on sick leave, maternity, paternity or adoption leave, caring for someone, or serving on a jury.

You can click here to read our full guide to UK National Insurance.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Our firm often receives inquiries on how to apply for National Insurance credits. The process varies depending on the specific circumstances; sometimes they are applied automatically, while in other cases, an application is necessary. To better understand your situation, we recommend seeking professional advice.

Two primary types of National Insurance credits exist – Class 1 and Class 3. Class 3 credits contribute towards your State Pension and some bereavement benefits. Class 1 credits not only cater to the same benefits as Class 3 but also offer additional ones like Jobseeker’s Allowance.

However, it’s important to note that National Insurance credits usually don’t apply to self-employed individuals who pay Class 2 National Insurance or older married women who opted to pay a reduced rate of National Insurance before April 1977.

Need Assistance from an Accountant?

At CIGMA Accounting, we make it our mission to guide you through these complexities, helping you make informed decisions about your financial future. If you have more questions about National Insurance credits or other financial matters, reach out to us and our sales team will be in touch for a free consultation!


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

national insurance guide; london accountant; UK national insurance contributions; national insurance rates

Understanding National Insurance: Contributions, rates and employers

National Insurance (NI) is an essential part of the UK’s tax system, but it is often misunderstood. If you are new to the UK or starting your first job, understanding National Insurance contributions can be confusing, and you may be left wondering – how is National Insurance calculated? In this blog post, we will explain what National Insurance contributions are and how they differ from income tax, what services NI payments fund, National Insurance rates, and finding your National Insurance number.

 

What is National Insurance and how is it different from income tax?

National Insurance (NI) is an essential part of the UK’s tax system, but it is often misunderstood. If you are new to the UK or starting your first job, understanding National Insurance contributions can be confusing, and you may be left wondering – how is National Insurance calculated? In this blog post, we will explain what National Insurance contributions are and how they differ from income tax, what services NI payments fund, National Insurance rates, and finding your National Insurance number.

 

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What services do National Insurance CONTRIBUTIONS fund?

National Insurance contributions go towards a range of services and benefits provided by the UK government. The main services and benefits that NI payments fund are:

  • The State Pension.
  • Jobseeker’s Allowance.
  • Employment and Support Allowance.
  • Maternity Allowance
  • Widowed Parent’s Allowance.
  • Bereavement Support Payment.
  • The National Health Service (NHS).
  • Personal Independence Payment (PIP).
 

Who pays for National Insurance and what are National Insurance rates?

If you are employed, you and your employer will both have to pay National Insurance contributions. The amount you pay will depend on how much you earn. The current rate for employees is 12% on earnings between £242 and £967 per week, and 2% on earnings above £967 per week. Your employer will also pay 13.8% of your earnings above £175 per week.

If you are self-employed, you will need to pay Class 2 and Class 4 National Insurance contributions. Class 2 contributions are a fixed weekly amount of £3.45, and Class 4 contributions are based on your profits. The current rate for Class 4 contributions is 9% on profits between £12,570 and £50,270 and 2% on profits over £50,270.

For those working abroad, you can read our blog post on overseas NI contributions.

 

What are the benefits of paying National Insurance contributions?

Paying National Insurance contributions can provide you with access to a range of state benefits, including the State Pension, maternity and paternity pay, and sick pay. It can also help you to qualify for contributions-based Jobseeker’s Allowance and Employment and Support Allowance if you are unable to work due to illness or disability.

In addition to providing you with access to state benefits, paying National Insurance contributions can also help you to build up a National Insurance record, which is used to calculate your State Pension entitlement. To qualify for the full State Pension, you will need to have paid or been credited with enough National Insurance contributions.

 

UK national insurance contributions; london accountant; how is national insurance calculated

Can I make voluntary NI contributions?

If you are not employed or self-employed, you may still be able to make voluntary National Insurance contributions. This can be beneficial if you have gaps in your National Insurance record, for example, if you have taken time out of work to care for children or have lived abroad.

Voluntary contributions can help you to build up your National Insurance record and may help you to qualify for certain state benefits, including the State Pension. The amount you pay and the benefits you receive will depend on the type of voluntary contributions you make. 

There are two types of voluntary NI contributions:

Class 3 contributions:
These are voluntary contributions that you can make to fill gaps in your National Insurance record. The current rate for Class 3 contributions is £15.40 per week. You can make Class 3 contributions for any tax year in which you have a gap in your National Insurance record.

Class 2 contributions:
These are voluntary contributions that you can make if you are self-employed but have not earned enough to be required to pay Class 2 contributions. The current rate for Class 2 contributions is £3.05 per week. Paying Class 2 contributions voluntarily can help you to build up your National Insurance record and qualify for state benefits.

 

It is worth noting that voluntary contributions may not always be the best option for everyone. Before making any voluntary contributions, you should speak to a financial advisor or contact HM Revenue and Customs (HMRC) for advice on your individual circumstances.

 

How to find your National Insurance Number

Your National Insurance Number (NIN) is a unique identifier used by HM Revenue and Customs (HMRC) to track your National Insurance contributions and ensure that you are paying the correct amount. If you are unsure of your NIN, there are several ways to find it:

  1. Check your payslip – Your NIN should be printed on your payslip. If you are employed, your employer should have your NIN on file and include it on your payslip.
  1. Check official documents – Your NIN may be listed on official documents such as your P60, tax return, or any correspondence you have received from HMRC.
  1. Contact HMRC – If you are unable to find your NIN, you can contact HMRC and request that they send you a letter confirming your NIN. You will need to provide personal information such as your name, date of birth, and address to verify your identity.
  1. Use the government’s online service – You can use the government’s online service to find your NIN if you have a UK passport or a UK driving licence. You will need to create an account and provide personal information to verify your identity.

It’s important to keep your NIN safe and secure, as it is a valuable piece of personal information that can be used to steal your identity. Never share your NIN with anyone unless you are sure that it is necessary, and always keep it private.

 

Need Assistance from an Accountant?

National Insurance contributions are an important part of the UK’s tax system, and they fund a range of state benefits and services. Understanding National Insurance can be confusing, but it is essential to ensure that you are paying the correct amount and have access to the state benefits that you are entitled to.

If you are unsure about your National Insurance contributions or entitlement to state benefits, you should speak to a financial advisor. Our CIMA-registered accountants at CIGMA Accounting would be happy to assist with any of your personal or business accounting needs. Contact us via the form below for a free quote.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Deadline to top-up NIC contributions extended

In certain circumstances it can be beneficial to make voluntary National Insurance Contributions (NICs) to increase your entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up for gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the new State Pension.

This deadline was set to expire on 5 April 2023 but had been extended until 31 July 2023. The deadline has now been further extended until 5 April 2025 to help allay continued concerns that the existing deadline would not have allowed many taxpayers to fill gaps in their NIC records. HMRC’s helplines have been struggling to meet the demands for information and processing claims to pay additional NIC contributions.

HMRC has also confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022-23 until 5 April 2025.

You might want to consider making voluntary NICs if:

  • You are close to State Pension age and do not have enough qualifying years to get the full State Pension.
  • You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life.
  • You are self-employed and do not have to pay Class 2 National Insurance contributions because they have low profits.
  • You live outside the UK but want to qualify for benefits.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether you should consider making voluntary NICs to make up missing years, known as topping up. Not everyone will benefit from making voluntary NICs and a lot depends on how close you are to retirement age and your NIC payments to date. If you think this opportunity may be relevant to your circumstances, please be in touch.

Source:HM Revenue & Customs| 19-06-2023
the best way to pay yourself as a company director in the UK; london accountant; dividends taxation; income tax

How to best pay yourself as a UK company director

As a new company director in the UK, you are likely wondering how to best pay yourself through your company. You have several options for transferring company profits into personal income, including salaries, dividends, and investments. This post outlines the pros and cons of each, and gives you the information you will need to make your income as tax efficient as possible.

 

How can a company director pay themselves?

Company directors are considered employees of the company and so take a salary which is subject to income tax. Directors can also pay themselves using dividends, which are a common method of distributing profits to shareholders (which includes directors).

Salaries and dividends are subject to different tax rates, tax-free allowances, and National Insurance obligations, which we break down below.

 

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What is the difference between salary and dividends?

Dividends are a way for companies to distribute a portion of their profits to their shareholders. As a director, you can choose to pay yourself through dividends instead of a salary. Dividends are typically paid out after the company has paid its taxes and can be a tax-efficient way to receive income.

However, there are some basic rules to follow. Firstly, your company must have sufficient profits to pay dividends, and you should keep records of these profits. Secondly, dividends must be declared and approved by the company’s shareholders. Lastly, dividends cannot be paid if the company is insolvent or if the payment would render it insolvent.

When it comes to tax purposes, it’s important to find the right balance. Dividends are subject to lower tax rates than salaries. You also do not need to pay National Insurance Contributions on dividend income, which you would have to do so on any salary income.

Lastly, as is also the case with personal income tax, a certain amount of dividends you receive is tax-free.

You can read our full guide to dividends to learn more.

 

What is the most efficient way for a company director to pay themselves?

From the explanation above, it should be clear that paying yourself efficiently as a company director involves balancing tax-free personal allowances and differing tax obligations.

The table below should be very helpful in outlining these differences between salary and dividends.

company director pay; dividends tax; income tax; london accountant

At the most basic level, directors clearly want to use all of their available tax-free personal allowance. That means taking at least £12,570 as salary and £1,000 as dividends.

It is important to note that once you reach the Higher Rate income bracket, your personal allowance amount begins to decrease. And in the Additional Rate bracket, there is zero tax-free personal allowance.

An important factor that is left out of the above table is the added cost of National Insurance Contributions on salary income. National Insurance Contributions must be paid both by the employee and employer. The basic NIC rate for employees is currently 12% of earnings, and an additional 13.8% of earnings to be paid by the employer. These are basic figures, see our guide to National Insurance for a detailed understanding.

As a company director, you will effectively bear both of these costs, making salary income even less appealing when compared to dividends. A common strategy is to take enough of a salary that the director qualifies for state benefits such as the State Pension, but that does not incur NIC payments.

Under most circumstances, dividends will be more tax efficient than salary income, though how easy it is to distribute dividends will depend on the structure of your company and its shareholders.

Using investments as tax-efficient income sources

It is also important to take advantage of any other tax free allowances that HMRC makes available. An example of this would be transferring company profits into investments, rather than personal salary. In that way, you could take advantage of the tax-free capital gains allowance of £6,000.

Trusts are another way of accomplishing this, and which have their own tax-free capital gains allowance of £3,000.

It is also essential to consider how increased income may push you into a new tax band, and create much higher tax liability. For example, the dividend tax rate jumps from 8.75% in the first income bracket to 33,75% in the second.

As such, it may be more profitable in the long term to reinvest money into business (tax-free), or into other investments, rather than taking extra personal income that pushes you into a higher tax band.

 

Need Assistance from an Accountant?

Our CIMA-certified Management Accountants specialise in working with businesses to form companies, create financial strategies and take care of regulation compliance.

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Check your NIC record

HMRC offers an online service to check your National Insurance Contributions (NIC) record online. In order to use the service, you will need to have a Government Gateway account. If you don't have an account, you can apply online.

By signing in to the 'Check your National Insurance record' service you will also activate your personal tax account if you haven’t already previously done so. HMRC’s personal tax account can be used to complete a variety of tasks in real time, such as claiming a tax refund, updating your address and completing your Self-Assessment return.

Your National Insurance record online will let you see:

  • What you have paid in contributions up to the start of the current tax year (6 April 2023).
  • Any National Insurance credits you’ve received.
  • If gaps in contributions or credits mean some years don’t count towards your State Pension (they aren't 'qualifying years').
  • If you can pay voluntary contributions to fill any gaps and how much this will cost.

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record and thus to increase your entitlement to benefits, including the State or New State Pension. If you would like to discuss this further, please do not hesitate to be in touch.

Source:Department for Work & Pensions| 15-05-2023

National Insurance for company directors

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses that exceeds the Primary Threshold. The annual threshold is £12,570 in the current 2023-24 tax year.

Many director shareholders take a minimum salary and any balance of remuneration as dividends. This tends to reduce National Insurance Contributions (NICs), and in some case income tax. The planning strategy is to pay a salary at a level that qualifies the director for state benefits, including the State Pension, but does not involve payment of any NICs.
 
A director’s liability to NI is worked out based on their annual (or pro-rata annual) earnings. This differs from regular employees whose liability is calculated based on their actual pay period, usually weekly or monthly. Payments on account of a director’s NICs can be made in a similar way as for employees. However, an annual adjustment must be made at the end of the tax year.

Directors, who are first appointed during a tax year, are only entitled to a pro rata annual earnings band which depends on the actual date appointed and on the amount of time remaining in the tax year. Care needs to be taken in these circumstances to avoid an unexpected liability to pay NIC.

There are a number of considerations to take into account when setting the most tax/NIC efficient salary/dividend package. Please call if you need advice in this area.

Source:HM Revenue & Customs| 08-05-2023
entertaining a client; london accountant; entertainments for clients

Entertaining a client: Don’t forget your tax and reporting

As a business owner in the UK, it’s crucial to understand the tax, National Insurance, and reporting obligations associated with providing entertainment for clients through your employees. Whether it’s wining and dining a client or hosting social events, certain rules govern the financial aspects of these activities. In this article, we’ll explain what constitutes entertaining a client, differentiate between business and non-business entertainment, and outline how they can impact your tax, National Insurance, and reporting obligations.


What Qualifies as entertaining a client?

Entertainment includes various activities such as dining, drinking, and hospitality provided to clients. When your employees engage in such activities on behalf of your business, it becomes necessary to consider the tax and National Insurance implications and fulfil reporting requirements.

 

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Entertaining a client for business purposes

Business entertainment refers to instances where you entertain clients with the specific purpose of discussing a business project or establishing and nurturing business connections. The rules for business entertainment remain the same regardless of whether you directly arrange and pay for the entertainment, pay a supplier for entertainment arranged by your employee, or reimburse your employee’s entertainment expenses.

In all cases, you must report the cost of business entertainment on form P11D. However, you are not required to deduct or pay any tax or National Insurance on these expenses.

 

Non-Business Entertainment for clients

Non-business entertainment involves entertaining clients for social reasons or maintaining business acquaintances outside of specific projects. The tax, National Insurance, and reporting obligations for non-business entertainment differ based on who arranges and pays for the entertainment.

 

Entertainment for clients Arranged and Paid by Your Business

If your business arranges and pays for non-business entertainment, you must report the cost on form P11D and pay Class 1A National Insurance based on the value of the benefit provided.

 

entertaining a client; entertainment for clients; london accountant

Entertainment for clients Arranged by the Employee and Paid by Your Business

When your employee arranges non-business entertainment, and your business covers the expenses, you must report the cost on form P11D. Additionally, you need to add the full cost to the employee’s earnings and deduct Class 1 National Insurance (but not PAYE tax) through payroll.

 

Entertainment for clients Arranged and Paid by the Employee, with Reimbursement by Your Business

In the case where your employee arranges and pays for non-business entertainment, and your business reimburses the employee, the reimbursement amount is considered earnings. Consequently, you should add it to the employee’s other earnings and deduct PAYE tax and Class 1 National Insurance through payroll.

 

Completing form P11D

When completing form P11D, an entertainment-related tick-box helps HMRC determine whether your employee can claim a tax deduction for the entertainment expenses provided by your business. If you are completing the form for a charity or a tonnage tax company, you don’t need to enter anything in the box.

For other businesses, tick the box if the cost of the entertainment will be disallowed in your business’s tax calculations. Conversely, put a cross in the box if the cost won’t be disallowed.

 

want help from an expert?

CIGMA Accounting would be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

london accountant; personal tax; national insurance; self employed tax

The Ultimate Guide to Personal Tax in the UK

Navigating personal tax in the UK can be overwhelming, but it doesn’t have to be. Our comprehensive guide breaks down the process and provides helpful tips for filing your personal tax return. From understanding tax codes to claiming deductions, we’ve got you covered.


Understand Your Tax Obligations

Before you can file your personal tax return in the UK, it’s essential to understand your tax obligations. This includes knowing your tax code, which your employer uses to calculate how much tax should be deducted from your pay. You should also be aware of any taxable income you have, such as rental income or self-employment earnings, and any deductions or allowances you may be eligible for. Taking the time to understand your tax obligations can help ensure you file an accurate and complete tax return.

Let’s have a look at what you’re required to pay taxes on as a UK resident: your income, savings, and investments.

 

Income Tax

Income tax is a tax on your earnings, including wages, salary, and self-employed income. The amount you pay is based on your earnings and tax code. There are a few things to take note of when looking at your income tax, including all your forms of income, your tax-free personal allowance and the different tax bands.

 

Personal tax Allowance

Everyone has a personal allowance, which is the amount of money you can earn before you start paying tax. As of April 2023, the current personal allowance is £12,570.

It is important to note that the Personal Allowance is reduced by £1 for every £2 earned between £100,000 and £125,140. In essence, this means that those earning over £100,000 in the Higher rate band (explained below) will be paying tax on a larger portion of their income, and those in the Additional rate band have no Personal Allowance and pay a 45% tax on all of their income.

 

TAX BANDS

The amount of income tax you pay depends on how much you earn. There are different tax bands for different levels of income, which are:

  • Basic rate: 20% on earnings between £12,570 and £50,270
  • Higher rate: 40% on earnings between £50,271 and £150,000
  • Additional rate: 45% on earnings over £150,000
Importantly, as explained above, individuals with taxable incomes over £100,000 lose £1 of their tax-free personal allowance for every £2 of income, and those in the Additional rate band have zero tax-free personal allowance.
 

PERSONAL Tax Codes

Your tax code is used by your employer or pension provider to calculate how much income tax to deduct from your earnings. It’s based on your personal allowance and any other allowances or deductions you’re entitled to. The most common tax code is 1257L, usually for individuals with one source of income and who are eligible for the full personal allowance.

 

Where can I find my Tax Code?

You can find your tax code by registering with the HMRC and checking your tax code online. Alternatively, you can also find your tax code on your payslips. Payslip format differs from company to company, but it can usually be found at the top right of your payslip next to your name.  

To check whether you are on the correct tax code, or get a better understanding of what your tax code means, you can read our guide on tax codes blog here: Understanding Tax Codes.

 

National Insurance Contributions

National Insurance contributions (NICs) are payments made by employees, self-employed individuals, and employers to fund state benefits, such as the state pension, unemployment benefits, and healthcare. NICs are calculated on your earnings, and there are different rates depending on your employment status and earning. These contributions are deducted from your earnings and paid to HM Revenue and Customs (HMRC) on a regular basis.

 

Who Needs to Make National Insurance Contributions?

In the UK, most people who are over 16 and earn over a certain amount of money need to pay National Insurance contributions (NICs). This includes:

  • Employees earning more than £184 per week
  • Self-employed people with profits over £6,515 per year
  • People who earn money from renting out property
  • People who receive certain benefits or tax credits above a certain level
  • Some people who live abroad but work in the UK
  • People who are over 16 and under the State Pension age who have income from savings or investments above a certain level.

There are some exceptions to this, such as people who are over State Pension age (66 years), people who earn less than the minimum threshold, and some people who are self-employed but have low profits.

NIC bands in the uk

In the UK, National Insurance contributions (NICs) are divided into different brackets, depending on how much you earn. The current NICs brackets for the 2022-23 tax year are as follows:

  • If you earn less than £184 per week, you do not need to pay NICs.
  • If you earn between £184 and £967 per week, you pay NICs at a rate of 12% on earnings above £184.
  • If you earn more than £967 per week, you pay NICs at a rate of 2% on earnings above this amount.

For self-employed individuals, the brackets are slightly different, as NICs are based on your profits rather than your earnings. The current NICs brackets for the self-employed for the 2022-23 tax year are:

  • If your profits are less than £6,515 per year, you do not need to pay NICs.
  • If your profits are between £6,515 and £9,568 per year, you pay NICs at a rate of 9% on profits above the lower limit.
  • If your profits are over £9,568 per year, you pay NICs at a rate of 2% on profits above this amount.
 
personal tax; london accountant; national insurance; sole trader

Where Can I find my National insurance number?

You can find your National Insurance number:

  • on your payslip
  • on your P60
  • on letters about your tax, pension or benefits
  • in the National Insurance section of your personal tax account

You can apply for a National Insurance number if you do not have one or find your National Insurance number if you’ve lost it.

 

Important Documentation and Forms for Personal Tax

Whether you are a sole trader, a PAYE employee or a director, there are a few things you should keep track of during the year to make your personal tax returns effortless and efficient.

 

PAYE Documentation and Forms

As a PAYE employee, there are a few things to take into account when completing a self-assessment. The “P” range of forms are important for you to keep track of all your expenses and benefits, as well as the codes you need to be aware of. A brief breakdown of these forms:

P800

You may receive a P800 form, also known as a ‘tax calculation letter’, if HMRC believes you have paid the wrong amount of tax – either too much or too little


P45

When you stop working at a job, your employer must supply you with a P45 form. This form details how much tax you have paid on your salary so far for that tax year. Tax years run from 6 April to 5 April the following year.

P60

The P60 form details how much tax you paid on your salary via PAYE. If you have multiple jobs, you will get a P60 from each of them. If you work for an employer on 5 April, that employer must provide you with your P60 by May 31st of that year.

P11D

P11D forms are used to report your ‘Benefits in Kind’ (or simply ‘benefits’) to HMRC. Benefits are anything given to you by an employer that has monetary value and is not wholly necessary for your work.

For a more detailed view of the PAYE forms, please see our guide: What are P800, P45, P60 and, P11D Forms? 

Other important things to take note of are expenses that can offer tax relief benefits. You can read more about which expenses you can claim as a PAYE Employee in the following post: Save on Taxes – Tax Exemptions in the UK.

 

Sole Trader / Sole Proprietor / Entrepreneur

As a sole trader, you are trading as a business which means you may have additional business expenses and income that need to be listed. As a sole trader, there are many expenses that you can claim. See our guide here: What Expenses can I Claim for As Self Employed? 

At CIGMA we love working with small businesses and helping them in the most tax-efficient way. We also want to make it easy for entrepreneurs to manage their taxes which is why we’ve created a bookkeeping spreadsheet to assist you in keeping your information in an orderly manner: 

Download Our Free Bookkeeping Spreadsheet:


When Do You Need To Submit Personal Tax Returns to the HMRC?

There are clear guidelines as to who needs to submit a personal tax return and who should not. We’ve created an in-depth guide that you can read here: Do I Need To Submit a Self-Assessment? 

 

However, in short, anyone meeting one or more of the following criteria is required by law to submit a tax return:

 

  • Taxable income was over £100,000.
  • Have a rental income of over £1,000.
  • Received untaxed income over £2,500 (example: tips or commission).
  • Savings or Investment income over £10,000.
  • State pension as your only source of income and was over your personal allowance of £12,750 .
  • Sole proprietor earning over £1,000.
  • Earning any type of foreign income.
  • Claiming child benefit and your or your partner’s income exceeds £50,000.
  • You are a trustee of a trust or registered pension scheme.
 

How Do I Pay Taxes in the UK?

In the United Kingdom, individuals who meet the above-mentioned criteria must complete and submit a self-assessment to the HMRC. Never filed a self-assessment before? Not a problem. We’ve created a detailed guide to submitting your self-assessment here: Complete your Self Assessment Like A Pro.

A self-assessment takes into account your tax code, NIC, expenses and income to see whether you are eligible for a tax rebate. Tax rebates are usually paid within 5 days of your self-assessment being approved by the HMRC.

To have the best chance of receiving a tax rebate, it is advised to make use of a tax return specialist. At CIGMA we specialise in tax returns so we complete our client’s self-assessments by taking everything into consideration so that you have the best possible chance to get a tax rebate.

 

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

eligibility for UK employment allowance 2023

Eligibility for Employment Allowance 2023

If you’re a business owner in the UK, you may be eligible for the Employment Allowance, which can help you save money on your National Insurance contributions. This allowance can be a valuable resource for businesses looking to reduce their expenses and squeeze more into their bottom line.

What is the UK Employment Allowance?

The UK Employment Allowance is a government initiative that allows eligible small businesses to reduce their National Insurance contributions by up to £5,000 per year. This can be a significant cost savings for businesses, especially those with a small number of employees.

Who is eligible for the UK Employment Allowance?

To be eligible for the UK Employment Allowance, a business must have paid Class 1 National Insurance contributions in the previous tax year. However, the business’ Class 1 NI contributions must also have been less than £100,000 in that previous tax year.

Additionally, the business must have an employer’s liability insurance policy in place. The allowance is available to most businesses, including sole traders, partnerships, and limited companies.

However, businesses that employ only the owner or director are not eligible for the allowance. It’s important to note that businesses can only claim the allowance once per tax year, regardless of how many PAYE schemes they operate.

How much can businesses save with the UK Employment Allowance?

Businesses in the UK can save up to £5,000 per year on their National Insurance contributions with the UK Employment Allowance. This is the amount for the 2022/23 financial year. The maximum amounts for previous years were:

  • 2015-16: £2,000
  • 2016-20: £3,000
  • 2020-22: £4,000

Of course, you are not automatically entitled to this full amount. The allowance depends on the amount of National Insurance contributions being made – you can only claim the full amount if you’ve paid £5,000 or more in NI contributions that tax year.

How to claim Employment Allowance

Once you are sure your business is eligible, businesses can claim the allowance through their payroll software or by contacting HM Revenue and Customs. You’ll pay less employers’ Class 1 National Insurance each time you run your payroll until the £5,000 has gone or the tax year ends (whichever is sooner). It’s important to keep records of the claim and any adjustments made to National Insurance contributions.

We're here to help protect your business interests

We strive to bring a creative, quality and commercially focused approach to all of our work.  We’re here to guide you, so speak to us today to see how we can help to protect your business interests.

More time to top-up NICs

In some circumstances it can be beneficial to make voluntary National Insurance Contributions (NICs) to increase your entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up for gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the New State Pension. This deadline was set to expire on 5 April 2023 but has now been extended until 31 July 2023 after the government accepted significant public concern that many taxpayers would not meet the deadline.

You might want to consider making voluntary NICs if:

  • You are close to State Pension age and do not have enough qualifying years to get the full State Pension.
  • You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life.
  • You are self-employed and do not have to pay Class 2 National Insurance contributions because you have low profits.
  • You live outside the UK but want to qualify for certain benefits.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether you should consider making voluntary NICs to make up missing years, known as topping up. Not everyone will benefit from making voluntary NICs and a lot depends on how close you are to retirement age and your NIC payments to date. If you think this opportunity may be relevant to your circumstances, please be in touch.

Source:HM Revenue & Customs| 20-03-2023

National Insurance if working abroad

If you move abroad, it can often be advantageous to continue paying your UK National Insurance Contributions (NICs) in order to preserve your entitlement to the State Pension and other benefits.

If you are working in the EU, Iceland, Liechtenstein, Norway, or Switzerland the rules depend on your situation.

The main rules are as follows:

  • If you work for an employer in the EU or Switzerland. You’ll normally pay social security contributions in the country you work in instead of NICs. This means you will be covered by that country’s social security laws and may be entitled to benefits there. However, your entitlement to benefits in the UK (for example State Pension) may be affected as there will be a gap in your NIC contributions record.
  • If you work for an employer in Iceland, Liechtenstein or Norway. You may need to pay into more than one country’s social security scheme at the same time. You need to check if you are covered by the EEA-EFTA Separation Agreement.
  • If your UK employer sends you to work in the in the EU or Switzerland. You might be able to continue paying NICs if you are abroad for up to 2 years. This means you won’t have to pay social security contributions abroad. There is a special form which an employee or employer must complete to notify HMRC and apply for the relevant certificate. These special rules can also apply if you are self-employed or working in the UK and one or more EU countries at the same time.

Some countries have a Reciprocal Agreement (RA) or Double Contribution Convention with the UK. You will usually pay social security in the country you are going to if you work in any of the following:

  • Barbados, Bermuda, Bosnia-Herzegovina, Canada, Chile, Gibraltar, Guernsey, Isle of Man, Israel, Jamaica, Japan, Jersey, Kosovo, Mauritius, Montenegro, North Macedonia, Philippines, Republic of Korea, Serbia, Turkey and USA.

For all other countries not covered by a social security agreement, you may need to pay social security contributions in the country where you are working. You must continue paying NICs for the first 52-weeks you are abroad if you meet the following qualifying conditions:

  • you are working abroad temporarily;
  • your employer has a place of business in the UK;
  • you are ordinarily resident in the UK; and
  • you were living in the UK immediately before starting work abroad.
Source:HM Revenue & Customs| 06-03-2023

NIC and company directors

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses that exceed the Primary Threshold. The annual threshold is pro-rated to £11,908 this year following the increase to £12,570 from 6 July 2022 (£9,880 from 6 April 2022 – 5 July 2022). The primary threshold from 6 April 2023 will be £12,570.

Many director shareholders take a minimum salary and any balance of remuneration as dividends. This tends to reduce National Insurance Contributions (NICs), and in some case Income Tax. The planning strategy is to pay a salary at a level that qualifies the director for state benefits, including the State Pension, but does not involve payment of NICs.
 
A director’s liability to NI is worked out based on their annual (or pro-rata annual) earnings. This differs from regular employees whose liability is calculated based on their actual pay period, usually weekly or monthly. Payments on account of a director’s NICs can be made in a similar way as for other employees. However, an annual adjustment must be made at the end of the tax year.

Directors, who are first appointed during a tax year, are only entitled to a pro rata annual earnings band which depends on the actual date appointed and the amount of time remaining in the tax year. Care needs to be taken in these circumstances to avoid an unexpected liability to pay NIC.

Source:HM Revenue & Customs| 06-03-2023
guide to compliance obligations for UK companies

Your guide to UK Compliance Obligations

Companies need to follow rules set out by many different government bodies, written in various legislative documents. When setting up and running a limited company, you have to keep in mind all of the following:

  • Complying with applicable industry regulations set out by professional regulators – for example, the Financial Conduct Authority, the Office of Rail and Road, the Law Society or the Environment Agency
  • Complying with finance regulations – such as tax, payroll, HMRC, accounting, record keeping, Companies House and anti-money laundering regulations
  • Employment law and workers’ rights
  • Health and safety for workers and visitors to your offices/site
  • General Data Protection Regulation (GDPR) 
  • Contracts and agreements with third parties
  • Sector-specific permits, licences, permissions

It’s an expansive list! Our accountants at CIGMA Accounting are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.

CIGMA Accounting helps businesses around the UK grow while navigating the red tape. You can contact us here for a free quote.

Limited company obligations

This article is going to focus on the Companies Act 2006, which is the main piece of law setting out rules and expectations for limited companies. The Act outlines what are called ‘compliance obligations’ for companies. These are actions which companies are obliged to do in order to comply with the rules.

company records

1. Registered office

Companies must provide an office address which is able to receive letters and documents. This address must be in the country where the company was registered. You are legally required to display the address on all communications with clients, and your website.

2. Confirmation statement

Companies must file a Corporation Tax Return to HMRC, even if the company has no tax to pay. This must include details about:

  • Capital allowances claimed for business asset purchases
  • Gains on assets sold
  • Directors’ loans that are unpaid
  • Reliefs to be claimed
  • Any losses carried forward

Businesses with a trade volume over £85,000 must also register with HMRC for VAT.

Your final tax obligation is Pay As You Earn (PAYE). The PAYE system collects taxes from employees at the source. You as the employer are responsible for running this system. This involves deducting income tax and National Insurance Contributions.

3. Directors

Aside from financial records, companies are also expected to keep up to date details about their addresses, directors, and shareholders. Incorporated businesses must supply the following information to Companies House:

This is an annual report which must record your:

  • Office address
  • Business activity
  • Details of directors
  • Ownership and division of shares

4. Event Driven Reporting

Companies must inform Companies House of changes such as:

  • Change of directors, shareholders, or their personal details
  • Change of office address
  • Sales of shares
  • Change of company name or constitution


This is in addition to the three statutory registers which businesses must keep.

Companies must appoint at least one individual as a director. Directors are legally responsible for running the company and ensuring reports are made. The director of a UK company does not have to be a UK resident and can live anywhere in the world. Directors must supply their personal information, including an address, which will be publically available.

financial statements

A company’s annual accounts are prepared at the end of a financial year. These accounts must include:

  • A balance sheet of what the company owns, owes, and is owed by others
  • An account of sales, running costs, and profit / loss made over the year
  • A director’s report

This account needs to be sent to all shareholders, HMRC, Companies House, and anyone who attends the company’s general meetings.

You are also required to appoint an auditor for each financial year. An auditor’s job is to report back to a company’s members and the government about the company’s accounts. They are meant to give a true and fair view of the company’s financial records and whether they have been done properly.

Workplace pensions

UK companies are required to put certain employees into a pension scheme, a process called ‘automatic enrolment’. If you employ at least one person aged between 22 and state pension age, who earns more than £10,000 per year, this applies to you. 

Business licences

A business licence is a permit issued by the government or a professional body that outlines how specific business activities should be carried out. The most easily recognisable example is that of a liquor licence, which authorises businesses to sell alcohol and under what terms they can do so.

The list of licences is extensive, but you can use HMRC’s online tool to find out which licences your business may need.

steps to complaince obligations

Mastering your compliance obligations is essential for success – this step-by-step guide provides an introduction to understanding & fulfilling them!

Step 1 - Conduct a Self-Assessment and Risk Analysis
Analysis 20%

When getting started, first conduct a self-assessment and risk analysis to identify any current or potential noncompliance issues. Evaluate the nature and breadth of your operations, processes, policies and regulations that may affect your compliance needs. This assessment can identify any areas that require actionable strategies to help ensure compliance maturity at all levels of your organisation.

Step 2 - Research Your Relevant Regulatory Requirements and Standards.
Research 40%

Complying with regulations and standards is an essential step for keeping up with compliance obligations. It’s important to research the relevant regulations and standards that apply to your organisation, in order to understand exactly what is required from you in terms of compliance. Identify any applicable laws, industry standards, or government policies which are relevant to your operations and need to be adhered to, as not doing so could result in harsh penalties for noncompliance.

Step 3 - Identify Gaps Between Your Compliance & Regulations.
Identify Gaps 60%

Once you’ve identified the applicable regulations, standards and policies, it’s important to review your current compliance procedures and ensure that they meet the required expectations. Compare your existing process to the regulations and identify any gaps between the two. If there are any discrepancies or potential risks, it’s essential to address them as soon as possible in order to avoid penalties or other consequences of noncompliance.

Step 4 -Implement an Effective Compliance Program.
Implement Program 80%

Before developing your compliance program, it’s essential to ensure that you understand the expectations and obligations of each applicable regulation. Once you’ve done this, you can create a comprehensive compliance program which will guide you through the process of meeting all legal requirements. This program should include risk and compliance assessments, processes for monitoring and ensuring ongoing compliance, and plans for regularly tracking and improving performance.

Step 5 -Monitor, Measure, and Document Your Compliance Efforts.
Monitor 100%

Once you have developed a compliance program, it is necessary to continuously monitor, measure, and document any efforts to ensure that your organisation is compliant. All changes to processes made as part of ensuring compliance must be tracked and regularly assessed. Your organisation should also institute an effective system for processing internal complaints related to any violations of law or policy. This system will provide critical information that can be used by the compliance team when it comes to improving compliance efforts.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Gaps in your National Insurance record

National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the number of qualifying years of National Insurance contributions which can increase the amount of benefits a person is entitled to, such as the State Pension.

This could happen if someone was:

  • employed but had low earnings;
  • unemployed and were not claiming benefits;
  • self-employed but did not pay contributions because of small profits; or
  • living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance credits. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may be able to pay voluntary contributions to fill any gaps if they are eligible.

Source:HM Revenue & Customs| 13-02-2023

Check your National Insurance Record

HMRC offers an online service to check your National Insurance Contributions (NIC) record online. In order to use the service, you will need to have a Government Gateway account. If you don't have an account, you can apply to set one up online.

By signing in to the 'Check your National Insurance record' service you will also activate your personal tax account if you haven’t already previously done so. HMRC’s personal tax account can be used to complete a variety of tasks in real time such as claiming a tax refund, updating your address and completing your Self-Assessment return.

Your National Insurance record online will let you see:

  • What you have paid, up to the start of the current tax year (6 April 2022)
  • Any National Insurance credits you’ve received
  • If gaps in contributions or credits mean some years don’t count towards your State Pension (they aren't 'qualifying years')
  • If you can pay voluntary contributions to fill any gaps and how much this will cost

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension. If you think this might be relevant, please do not hesitate to get in touch.

Source:HM Revenue & Customs| 09-01-2023

Applying for National Insurance number

If you do not already have a National Insurance number you will normally need to apply for one if you are planning to work in the UK, claim benefits, apply for a student loan or pay Class 3 voluntary National Insurance contributions. It can take up to 4 weeks for a National Insurance number to be issued after you have proved your identity.

HMRC’s guidance states that you can apply for a National Insurance number if you:

  • live in the UK;
  • have the right to work in the UK; and
  • are working, looking for work or have an offer to start work.

However, you can start work without a National Insurance number if you can prove you can work in the UK. You can also apply for benefits or a student loan without a National Insurance number. If a National Insurance number is required, you will be notified at the time.

Most teenagers in the UK are automatically sent a letter just before their 16th birthday detailing their National Insurance number. These letters should be kept in a safe place. It should be noted that a National Insurance number remains the same for life, even if your personal details change.

Source:HM Revenue & Customs| 02-01-2023