National Insurance Contributions – UK Taxpayer Guide
My National Insurance Contribution and why do I pay them? DO I HAVE TO PAY NATIONAL INSURANCE CONTRIBUTIONS? Yes you will be paying National Insurance Contributions if the following applies to you: ● You are 16 or above ● You are earning a certain amount of money by either being employed or self employed or maybe both. However, the thresholds and the rates to pay National Insurance are different in each case abs that depends on your employment status. The thresholds are as follows: ● Employed and earning a salary of £184 or more per week Or ● Self employed and you earn £ 6515 or more a year. Or ● You may be employed and self-employed at the same time, in that case you will be paying NI depending on your combined wages and also depending on the nature of your work. WHY DO I PAY NATIONAL INSURANCE CONTRIBUTIONS? You pay National Insurance Contributions because it’s a requirement by the government. It is illegal not to pay NI contributions if you are earning within certain thresholds. It’s actually for your own benefit and therefore some people also pay class 3 national insurance which is a voluntary contribution so they can stay eligible for certain state benefits which depend on the level of contributions. The national insurance contributions contribute towards the benefits which you can claim from the government. These benefits include the following: ● Job seekers allowance ● Maternity allowance ● Bereavement allowance ● Incapacity benefit WHEN AND HOW DO I HAVE TO PAY NATIONAL INSURANCE The way you pay your NI depends on your employment status.whether you are employed or self employed. If you are employed and you are paid through PAYE then your employer will deduct the NI and the income tax from your salary and you will get the net salary. The employer will deduct the NI from salary, bonuses,any maternity or paternity pay, sick pay if any and any over time. If you are self employed, and you pay your income tax through self assessment tax return you will be paying your NI depending on your income calculated in the self assessment tax return and you will pay this annually. There are 4 types of National Insurance with which you should be familiar with : Class 1 – paid by employees and employers Class 2 – paid by self employed Class 3 Voluntary contribution Class 4 paid by self employed with profits above a certain amount. WHAT IF I STOP WORKING WILL I BE LOSING MY ENTITLEMENT TO BENEFITS? There are certain benefits which are based on the contributions such as job seekers allowance, employment and support allowance and you might lose the entitlement to these if you haven’t paid enough NI contributions. For state benefits such as state pensions if you have gaps in your national insurance contributions you might still be entitled to the state pension but you might lose some of the benefit. If you have stopped working you can still pay voluntary contributions to avoid any gaps in your NI contribution records. If you realise that you have gaps in your NI contribution records you can only pay voluntary contributions for the previous 6 missed years. If you are employed, self-employed or both and you are looking for an accountant to sort out your taxes, do not hesitate to contact Taxaccolega and our expert team of accountants will be happy to help you. We are accountants based in Croydon, Surrey and London. Call us at 020 8127 0728 or send us a message here. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Selling Property – How to reduce CGT bill?
Selling Property How to reduce CGT bill? SELLING PROPERTY THAT IS YOUR MAIN RESIDENCE If you are selling property that is not your main residence you will qualify for the Private Residence Relief, This means that if you can prove that the property that you are selling was the private property and your main residence you won’t have to pay CGT on it. The property that an individual is selling will be considered their private residence if it’s their only home and they have used it as a main residence for all the whole period of time that they have owned it. It should not have been used for letting purposes for any period of time. You should have ever used part of the property or whole of the property for any business purposes. If you are self-employed and you have registered the home address as your business address, it might be considered that you are using it for business purposes and you might have to pay CGT when you sell the property. The whole property must be less than 5000 square meters to qualify for PPR. This includes the building as well as the grounds that form part of the property. This can be an issue for those living in the country side with substantial lands. To avoid paying CGT they can sell the land separately. The individual selling the property will have to prove that they did not buy the property just to make a gain. It’s not a problem for those who have been living in the house for years, however, in recent years when houses are bought for investment purposes, CGT will have to be paid when such a property is sold. SELLING PROPERTY THAT YOU INHERITED: If you have inherited a property and you have decided that you do not want to keep it, you can sell it during probate without paying CGT on it. If the value of the property increased after the person died then the individual who inherited the property will have to pay CGT on the sale of the inherited property. The government will estimate the increase in the value of the property after the person died and CGT will be paid on the gain during the probate. Although each situation is different, it is a good idea to sell the inherited property during the probate period so that the CGT paid is minimal. If you are selling or buying property and you need advice, please feel free to contact us by clicking here. We are tax experts based in Croydon and South hall. We can give you tax advise based on your individual situation so you can make maximise your profits. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Discretionery Trusts
Discretionary Trusts WHAT IS A DISCRETIONARY TRUST? A discretionary trust is one of the trusts which can be set up by an individual to manage their assets. By creating a discretionary trust you can manage your cash, other investments such as shares, land and buildings in such a way that it can be beneficial to your family in the future when they need it the most. Creating a discretionary trust involves a settlor (an individual who puts the assets in the trust), a trustee (the one who manages the trust), and a beneficiary (anyone who is benefitted from the trust). The beneficiary in the discretion trust does not have a right over the trust assets until they are distributed by the trustees according to the` trust deed’. For example, you want to set some money aside for your grandchildren from your estate and not give them right away, you (the settlor) will put the money in the trust which will then be distributed to the beneficiary (in this case your grandchildren) at a certain age say for example at the age if 25 when they can sensibly manage their money and this will be distributed by the trustee. WHY SHOULD I CREATE A DISCRETIONARY TRUST? Many people want to put their money in the trust as part of the estate planning. . Once the assets are added to the trust they are not part of your estate and therefore they are excluded for the inheritance tax purposes. A discretionary trust is created to ensure the family gets the wealth when they require it. It may be set by an individual going through a divorce who wants to secure his wealth or it may be set by an individual who wants to give some wealth to his parents who are already on state benefits. Once you put your wealth in the Discretionary trust you can make gifts to your family during your lifetime or even after your death. HOW DO WE CREATE A DISCRETIONARY TRUST? Creating a trust usually is a 4 step process in which an individual who is the settlor decides upon which assets to put in a trust, they then appoint the trustees who has the discretion over the distributions from the trust. The beneficiaries are chosen. The terms of the ‘terms of deed’ are defined. WHAT ARE THE TAX IMPLICATIONS? A discretionary trust has a standard rate band of £1000. This means the first £ 1000 is taxed at the standard rate of 20 % while the dividend income up to £1000 is taxed at 7.5%. Dividend income above £1000 is taxed at 38.1% while the other income is taxed at 45%. The trustees will pay the income tax on the income generated from the trust. For example if the trustees received the dividend income they need to pay £45 on the income of £100. The trustees need to fill in the tax return each year if there is income generated by the trust. When the income is then distributed to the beneficiary it comes with a tax credit. It will be treated as though it was already taxed at 45 %. If the trustee is a basic tax rate tax payer or a higher rate tax payer of 40 % they can reclaim the difference between the tax paid by them and the tax paid by the trustee by filling the Self-Assessment form. IF YOU NEED FURTHER HELP Putting money in a trust many require some expert advice. You need to consult a solicitor and a financial advisor to deal with the complex matters such as taxes. We at Taxaccolega can help you with this. Please feel free to contact us at 020 8127 0728 or drop us a message here and we will get back to you. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Tax Implications of Putting Money in a Trust – UK Guide
What are the tax implications? If I put my money in a trust You will be putting money in a trust because of the following reasons: 1. You want your hard earned money to be given to your children when you die and you do not want them to use it irresponsibly and therefore retain some control over your wealth. 2. You want to reduce the amount of inheritance tax by reducing the amount of your net estate. 3. You want your children to be benefitted from your wealth but at the same time you do not want to reduce their chances of getting a financial aid (such as student loan etc.) When you put money in a trust it no longer belongs to you. So for example, if there is an income generating asset in a trust such as shares, the income coming from the shares won’t belong to you and therefore you the creator of the trust (the settlor) won’t have to pay any income tax. INCOME TAX There are different types of trust and each trust have different set of rules. In case of a discretionary trust, it will be the responsibility of a trustee to pay the income tax. If there are more than one trustee then one trustee can be elected and made responsible for paying taxes. However, in case the trust fails to pay the taxes, all trustee can be held responsible for not paying taxes. A trustee needs to register themselves with HMRC when they are liable to pay the taxes. All the gains and the income should be reported in the annual Self-Assessment tax return and reported to HMRC. If you think you need an accountant for this you can call us at 020 8127 0728 or drop a message here and we will get back to you. Click here to find out the tax rates. IS INHERITANCE TAX PAID ON THE ASSETS IN A TRUST? For different types of trusts there are different inheritance tax rules. For discretionary trusts inheritance tax will be paid on the following occasions: 1. 20% inheritance tax will be charges on the value of the asset which is in excess of the personal allowance. 2. After every 10 years the assets in a trust needs to be revalued and 6% IHT will need to be paid on the revalued assets after deducting the IHT allowance. 3. If the assets are removed from the trust 6% IHT will need to be paid on the exit. WHEN A CAPITAL GAINS TAX NEEDS TO BE PAID? A capital gains tax needs to be paid by the settlor when the assets are transferred in the trust. When the trustee makes a gain on the disposal of an asset on behalf of the beneficiary. However, no CGT will be paid on the disposals or transfers of assets help in the ‘Bare trust’ and ‘Interest in possession trusts’. Capital Gains tax will also be paid by the trustee when the beneficiary becomes entitled to the asset. The CGT will be paid based on the market value. The calculations of CGT can be complicated, it might be worth hiring an accountant and we at Taxaccolega can help you explain the tax implications of your disposals and expenses and the reliefs you can use to reduce your CGT bill. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *