NI is 'employment' based unlike PAYE?

[gadgetman]

I intend to take on my wife on a small salary as an employee of my Ltd. She will have other employment in addition to this. The accountants have told me that for my Ltd there will be no NI payable due to the level of salary (unlike for PAYE).

I've not heard of this before. Can anyone confirm that NI is employment-based rather than applied to the inidividual as a whole?

[Nixon Williams]

Whilst I do not have the full details, yes, this sounds correct.

NIC generally is non-cumulative (company directors are an exception), so that it is payable just on the earnings in a particular period (usually weekly or monthly). So if your wife had 5 jobs each paying her £5200, she would not pay any NIC, even though her total income was £26,000!

Alan

[gadgetman]

Thanks, hadn't realised that at all.

[ASB]

Thanks, hadn't realised that at all.

The inverse though can be a problem. NI ceiling is around 40k, if you have total earnings over the ceiling from different jobs then it is possible to pay more than the maximum EE's NI - I believe there is a mechnism which allows it to be recovered though.

[Nixon Williams]

The inverse though can be a problem. NI ceiling is around 40k, if you have total earnings over the ceiling from different jobs then it is possible to pay more than the maximum EE's NI - I believe there is a mechnism which allows it to be recovered though.

Yes, you can apply for a deferment from the Contributions Agency in Newcastle - this ensures that you do not overpay.

Alan

[gadgetman]

But this is only an issue if she were actually paying NI in more than one employment, right?

[ASB]

Yes, and it doesn't seem likely it will apply to your circumstance.

But, just suppose gadgetwife hits the EE's NI ceiling in her main employment. She starts doing more work for you as well and you decide to pay her a salary of 10k, which will attract NI. She is then going to pay more the EE's maximum. So, in this position you would need to recover the overpayment from Newcastle