Wokingham Accountants
The payment of National Insurance contributions is linked to entitlement to the state pension. If sufficient National Insurance contributions of the right type are paid for a tax year, that year counts as a qualifying year for state pension and benefit purposes. A person may also secure a qualifying year if they are awarded National … Read more
As the cost of living crisis continues to bite, you may find that come 31 January 2025 you are struggling to pay your Self Assessment tax bill. If this is the case, it is important that you do not bury your head in the sand – the bill will not go away and, with the … Read more
Class 2 National Insurance contributions are flat-rate contributions which for 2023/24 and earlier tax years are payable by the self-employed where their profits exceed the relevant trigger threshold. For 2023/24 and 2022/23, the liability to pay Class 2 contributions arose where profits exceeded the lower profits threshold (set at £12,570 for 2023/24). For those years, … Read more
The way in which you operate your business determines the taxes that you pay and also your reporting obligations. If you work for yourself and run your business on your own as an individual other than through a limited company, you are a sole trader. By contrast, if you operate your business through a personal … Read more
Many people earn small amounts of money from self-employment, often as a side hustle. For example, this may be from craft or baking activities, tuition, or the provision of services, such as babysitting. If you earn money in this way, it is important to understand the associated tax and National Insurance implications. Tax consequences A … Read more
A sole trader or proprietor of an unincorporated business may incur training costs. The tax treatment of those costs depends on whether the costs are regarded as ‘revenue’ or ‘capital’ expenditure. HMRC have revised their guidance in this area, expanding the range of training for which a deduction is available. Old rules Previously, HMRC only … Read more
Entitlement to the state pension and certain contributory benefits depends on an individual having paid, or been credited with, sufficient National Insurance contributions. To qualify for the full single-tier state pension, an individual needs 35 qualifying years. A reduced state pension is paid where a person has less than 35 qualifying years, but at least … Read more
The National Insurance increases that came into effect from April 2022 have been reversed. How does this affect you if you are self-employed?
If their profits are high enough, the self-employed pay two classes of National Insurance contribution – Class 2 and Class 4. Class 2 contributions are flat rate contributions of £3.15 per week for 2022/23. It is the payment of Class 2 contributions that enables a self-employed earner to build up entitlement to the state pension … Read more
Although the National Insurance rates and thresholds for 2022/23 had already been set, at the time of the Spring Statement in March 2022, the Chancellor announced increases in the primary threshold which would align the starting point for National Insurance with the personal allowance from 6 July 2022. However, as the increase does not take … Read more
