2:4 National Insurance Contributions Flashcards Preview

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Flashcards in 2:4 National Insurance Contributions Deck (5)
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1

When was National insurance introduced and what for?

1948
To provide for the NHS and welfare benefits, pensions and sick pay which are now funded out of the general taxation

Originally a flat line and regressive but now more progressive

2

What is the difference between income tac and NIC

NIC is payable for the period worked and not the tax year

3

At what % are earnings above the upper earnings limit taxed at?

2%

4

What to do when an employee is a director?

Calculate the annual earnings threshold while taking into account any bonuses

5

What are the 4 ways to reform NI?

Merge with income tax
Manage align rules of both taxes as close as possible
Demerge - take it back to its roots where it was used to fund the NHS
Make do continue with the system and the deception that the rate of income tax is only 20%