It may be surprising for some businesses to discover that the majority of the statutory payments made on behalf of employees each month or quarter is made up not of PAYE tax but of National Insurance deductions. Therefore ensuring that the correct amount of National Insurance is paid over to HM Revenue and customs is essential for any business that employs staff.
The self employed also pay National Insurance (whether sole traders or partners) but there is more to National Insurance for the self employed than simply paying your “stamp” (currently £2.75 a week). Self employed also pay National Insurance of 9% on earnings between £7,956.01 and £41,865, and 1% thereafter. This is collected with self employed income tax due on 31 January and 31 July each tax year. Again it is important therefore to get the collection of this sum correct and minimise its impact on your ability to reinvest in your business or take drawings as required.