I am self employed and only earn about £25k a year what do the new NI rates and thresholds mean- should I put another £5k into a pension to reduce earnings and therefore my NI liabilities.
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Self employed, NIC changes
The government made two changes in the recent pre-budget report, one of which is to raise the National Insurance rate by 1%, the other is to raise the threshold at which you start paying national insurance by £570. The effect of these changes together is that you are no better or worse off if you earnings are around £20,000. There is no sudden leap in NI around £20,000. Neither of these changes take effect until the 6 April 2011. Where possible, you are better off delaying expenditure until 6 April 2011, so that you get more national insurance relief on the expense.
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