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Peter Arrowsmith, FCA |
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NATIONAL INSURANCE CONSULTANCY |
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Specialist technical support and other services for professionals |
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TIP OF THE MONTH |
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February 2012 |
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As we near the end of the tax year, accountants to smaller firms and payrollers in bigger ones need to remember that after the final payment to directors in the year the National Insurance paid by both director and the employer needs to be checked, calculated on the annual earnings period basis (or a pro-rata basis in the year of appointment, but not in the year of resignation). Other methods are often used in making calculations during the year and some of these methods even have the approval of HMRC and the force of law. Whatever methodology has been used an annual check will mop up any easily made errors due to resignation, death, a change in the employee’s applicable Table Letter (eg moving into or out of contracted-out employment, revoking a married woman’s reduced rate election or reaching state pension age) or simply variations in the level of pay. The widely held view that just because HMRC permits other methods of calculation during the year that is the end of the matter is a pure myth. The annual (or pro rata annual, if applicable) basis is the only basis that applies in every case, so check your calculations before submission of the year end returns. |
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Disclaimer The above information is provided without charge, and no responsibility can be accepted for actions taken or not taken as a result of it's contents. |
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Office 4, Knights Farm |
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Rushden |
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Northamptonshire |
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NN10 0SX |
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Phone/Fax: 01933 411941 |
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E-mail: mail@niconsultancy.co.uk |
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Member of the Updated 1/2/2012 |
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