The Student Room Group

National Insurance Rebate?

Hi, wondering if anyone can help me with this.

I'm a gap year student trying to save money before uni.

So I have read that you don't pay National Insurance until you earn over £8,628 a year.

I earn £1000 a month pre tax, so obviously over 12 months thats £12000, so I have been paying national insurance. I know that you can rebated some stuff, and I was wondering If i work for 8 months, It will be better for me?

So - Working 12 Months = £12000 x 0.88 (12% N) = 10560

Working 8 months = £8000, no national insurance as its less than threshold, therefore i earn £8k (-income tax) but I have 4 months spare in my year.

Therefore its better value for me to work 8 months right? I would quite like those 4 months off and 8k is enough for me.

Issue would arise if that 8K 8 Months is extrapolated to a full working year, if so I would pay NI right?

Thanks
You have misunderstood. There is no annual earnings threshold for NICs as there is with income tax. Rather there is a weekly (or monthly, according to how you are paid) threshold. If you earn more than the threshold in that period you pay NIC, with no prospect of a rebate if the annual pay total is lower than 52 (or twelve, for the monthly paid) times the period threshold.

The only way to get a NIC rebate is if you have had two or more jobs and ended up paying more than the annual maximum (which is very unlikely in your case).

https://www.moneyadviceservice.org.uk/en/articles/tax-and-national-insurance-deductions

https://www.gov.uk/national-insurance-rates-letters
(edited 4 years ago)
Original post by MrAcc
Hi,

I think you have misunderstood ,you wouldn't be taxed for the £8,000, as the personal allowance is £12,500

So essentially, the £8,000 would be money you would get with any deductions taking place, which there aren't any.

Yes there are. NICs are deductions, and the OP cannot avoid paying NICs. I suggest you learn a bit more about it before attempting to advise people.
Original post by Good bloke
Yes there are. NICs are deductions, and the OP cannot avoid paying NICs. I suggest you learn a bit more about it before attempting to advise people.

Ah I see, thanks very much. So I will definitely be paying NI, thanks for letting me know.

If I were to work overtime then, taking my annual earnings over the £12500 tax-free amount (lets say I earned £13700, extra £100 each month), Am I correct in saying that this extra £100 would be subject to income tax, which would be rebated to me if over the course of the year I earn less than £12500 as I will work less months?

Sorry if this is obvious or something I really have never been taught about tax and google is confusing me.

Cheers.
Original post by ThirdBack
Ah I see, thanks very much. So I will definitely be paying NI, thanks for letting me know.

If I were to work overtime then, taking my annual earnings over the £12500 tax-free amount (lets say I earned £13700, extra £100 each month), Am I correct in saying that this extra £100 would be subject to income tax, which would be rebated to me if over the course of the year I earn less than £12500 as I will work less months?

Sorry if this is obvious or something I really have never been taught about tax and google is confusing me.

Cheers.

Yes and if you start from behind ie. now then you would have to get upto the taxable amount before being taxed. So in other words you would only be taxed anything in month 6 if your total earnings are above half the personal allowance (or annual earnings as you’ve put it).
Original post by SteveyStack
Yes and if you start from behind ie. now then you would have to get upto the taxable amount before being taxed. So in other words you would only be taxed anything in month 6 if your total earnings are above half the personal allowance (or annual earnings as you’ve put it).

In case that doesn’t make sense you are right but depending when you start earning you may not be taxed at all and so you won’t get a refund!
Original post by SteveyStack
Yes and if you start from behind ie. now then you would have to get upto the taxable amount before being taxed. So in other words you would only be taxed anything in month 6 if your total earnings are above half the personal allowance (or annual earnings as you’ve put it).

got it, thanks. If I am rebated at all, thats all done automatically right, or do I have to contact them?
Original post by ThirdBack
Ah I see, thanks very much. So I will definitely be paying NI, thanks for letting me know.

If I were to work overtime then, taking my annual earnings over the £12500 tax-free amount (lets say I earned £13700, extra £100 each month), Am I correct in saying that this extra £100 would be subject to income tax, which would be rebated to me if over the course of the year I earn less than £12500 as I will work less months?

Sorry if this is obvious or something I really have never been taught about tax and google is confusing me.

Cheers.

If you are on PAYE, earn less than £12,500 and don't have an emergency tax coding at the end of the tax year you should end up paying no income tax. If you do pay income tax and should not have done then you can claim a refund.

As you have discovered, NICs are a different matter. In many ways they are essentially a weekly or monthy tax, not an annual one.
Original post by ThirdBack
got it, thanks. If I am rebated at all, thats all done automatically right, or do I have to contact them?

https://www.gov.uk/claim-tax-refund
also remember the tax year starts in April... so it's not what you earn in a 12 month period but what you earn April 4th (I think that's the dste) to April 3rd next year... so if you're on a gap year or anything you'll have 7k in one year and 7k in the other tax year and pay no income tax
Original post by doodle_333
also remember the tax year starts in April... so it's not what you earn in a 12 month period but what you earn April 4th (I think that's the dste) to April 3rd next year... so if you're on a gap year or anything you'll have 7k in one year and 7k in the other tax year and pay no income tax

Oh yeah I didnt think of that, Thanks
Original post by doodle_333
also remember the tax year starts in April... so it's not what you earn in a 12 month period but what you earn April 4th (I think that's the dste) to April 3rd next year... so if you're on a gap year or anything you'll have 7k in one year and 7k in the other tax year and pay no income tax

6th April to 5th April! Sorry I’m in tax so I know the date but the principal is right
Original post by SteveyStack
6th April to 5th April! Sorry I’m in tax so I know the date but the principal is right

Thanks! I can never remember and was too lazy to check

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