From April what could I take in wages and still be below the thresholds? 3


Pay

On the 6th April 2014 the personal allowance will increase to £10,000 (up £560) which means you can earn £10,000 before you pay income tax.

But you might want to keep your earnings below the NI Threshold, in previous years the employers and employee’s NI thresholds have been out of alignment but from 6th April 2014 they will be aligned, which means that earnings over £153 per week (£7,956 per year) will attract both 12% employees’ NI and 13.8% employers’ NI. For earnings above £805 per week (£41,865 per year), the employees’ NI rate drops to 2% but the employers’ NI rate remains unchanged.

So to avoid Income Tax and NI you would need to earn below £7,956.

But, there is some good news, from April 2014 there is a new ’employment allowance’ of £2,000 which you can offset against your employers NI.

steve@bicknells.net

3 comments

  1. Hello Steve,

    Thank you for your regular post.

    Your most recent post relating to the April thresholds.

    You mentioned that ” > > earnings over 153 per week (7,956 per year) will attract both 12% employees NI and 13.8% employers NI. >

    I am not sure if I am mistaken and have misunderstood the guideline, because I thought that the NI is calculated as follows: National Insurance earnings threshold

    National Insurance is calculated on gross earnings (before tax or pension deductions) above the earnings threshold.

    For 2013/14 the National Insurance threshold is 149 a week or 7,750 a year.

    Hence, if one earns above the threshold will pay 12% of your earnings between 7,750 and 41,450

    Anything above 41,450 a year, is subject to National Insurance at 2%

    If earnings are below the earnings threshold then one does not pay any National Insurance contributions

    Class 4 National Insurance Contributions

    For self-employed, they must additionally pay Class 4 contributions once profits reach a certain limit.

    In 2013/14 Class 4 contributions are 9% of taxable profits between 7,755 and 41,450,

    On profits over 41,450, Class 4 contributions are 2% of profits.

    Dak Patel FCCA

    dak@thinkacca.com

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