Introduction to Income Tax and NICs National Insurance contributions
Workers at Freeports From April 2022, employers who are registered at one of the new ‘Freeport tax sites’ in Great Britain are entitled to pay reduced NICs on earnings of eligible employees up to the new Freeport Upper Secondary Threshold (FUST) for up to three years. An eligible employee is one who spends at least 60% of their working hours at the relevant Freeport site and whose employment started between 6 April 2022 and 5 April 2026. They must not have been employed by the employer or a connected employer at any time in the previous two years.
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• Employees over State Pension age (SPA)
The State Pension is a benefit of the National Insurance scheme so, once the employee is old enough to receive this benefit, contributions into the scheme stop for the employee. (The employee does not need to be actually receiving a State pension.) There is no liability for employee ’s (primary) NICs on earnings paid after reaching this age but employer’s (s econdary) NICs are still due at the appropriate rate. The employer needs some authority in order to stop deducting the employee NICs or clear proof of the employee’s date of birth and knowledge of their SPA. The employee may produce form CA4140 (formerly CF384) Certificate of Age Exemption (sometimes called Certificate of Age Exception), which employees can apply for by contacting The Pensions Service (part of the DWP). An employee can also write to HMRC to obtain a letter confirming that they have reached their SPA and do not need to pay NICs (https://www.gov.uk/tax-national-insurance-after- state-pension-age/stopping-paying-national-insurance). Appropriate proof of the employee’s date of birth can include a birth certificate or valid passport. A copy of the evidence should be kept on the employee’s file. The SPAs for men and for women used to differ but are now aligned (and increased). During this alignment, the ages at which people reach SPA vary according to their gender and date of birth and so each person’s SPA must be confirmed in appropriate tables (https://www.gov.uk/government/publications/state-pension-age-timetable). Deferment In any single tax year, there is a maximum amount that an employee is required to pay in NICs on earnings up to and including the Upper Earnings Limit (UEL). The amount is 53 times (not 52 times) the Class 1 employee NICs payable on earnings at that year’s weekly UEL. Employees with more than one job who expect to pay the annual maximum NICs in any one job or mixture of jobs can apply to defer paying most of their NICs in any subsequent jobs. This avoids them overpaying. If they do overpay, then they have to wait until after the end of the tax year for a refund. While refunding is an automatic process, it can be protracted.
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