My current understanding is that NIC are taxed per employment and and income tax on combined income. So, say,
if steven currently earns £40k. He would have paid up to 41% tax on this employment.
He then takes up a second employment, say, giving 20k income, so he would have to pay Ni of about 12%, and then an income tax of 40%, resulting this employment to be taxed at up to 52%. (Of course, including employer NI, the 65% of the salary budget would have gone to the state).
Is this understanding correct ?
Steven
Replies (3)
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No
If someone earns above the Upper Earnings Limit for NI in one job, they can apply to HMRC for "deferment" of contributions in any other job. This means that they pay 1% NI on all earnings above the Earnings Threshold in that job, rather than paying 11% up to the Upper Earnings Limit.
The employer can't implement this until they get a form CA2700 from HMRC in respect of the employee but once this is received the employer refunds the excess NI already deducted in the current tax year.
The employee needs to make the application to HMRC, the employer can't do it their behalf. This is normally done using the form at the back of leaflet CA72. However, the version on the HMRC website is still the 2005/6 issue so it hasn't got the up to date application form but it contains phone numbers and a postal address which could be used.
Neil.
Furthermore
If you fail to apply for deferment of the NIC you can still apply in arrears for an assessment to be issued that would result in a refund of excessive NIC deducted at source.