Newsletter Supplement
Year End Tax Planning
National insurance
For a family business it is generally worthwhile paying wages to a spouse of between £109 (£111) (the employee lower earnings limit) and £148 (£153) (the employer threshold) per week. At this level of earnings no NIC will be due. The employee will accrue entitlement to a state pension and certain other state benefits.
Tip
A PAYE scheme would be needed to record the employee's entitlement to benefits and the wages.
For the self-employed there is a requirement to pay a flat rate contribution (Class 2). If your profits are low you can apply for exemption. The limit is £5,725 (£5,885). If contributions have been paid for 2013/14 and it subsequently turns out that earnings are below £5,725 a claim for repayment of contributions can be made. The deadline for this claim is 31 January 2015.
On the other hand as the contributions are only £2.70 (£2.75) a week it may be advisable to pay the contributions in order to maintain a contributions record. The alternative voluntary Class 3 contributions are £13.55 (£13.90) a week!