Sub Contractor National Insurance Rates

When it comes to hiring sub-contractors, there are many costs to consider, including National Insurance rates. These rates can vary depending on several factors, such as the type of work being done, the amount of money being paid to the sub-contractor, and the sub-contractor`s employment status. In this article, we will explore the various sub-contractor National Insurance rates that you need to know.

Firstly, it`s important to understand that National Insurance is a tax that both employees and self-employed individuals must pay in the UK. Employers are also required to make National Insurance contributions for their employees. If you hire a sub-contractor, you may be responsible for their National Insurance contributions, depending on their employment status.

For self-employed sub-contractors, they are responsible for their own National Insurance contributions. However, if you are paying them over a certain threshold, currently set at £6,515 per year, you will be required to deduct Class 2 National Insurance contributions from their payments. The rate for 2021/22 is £3.05 per week.

If you hire a sub-contractor who is employed by an agency or umbrella company, the National Insurance rate will depend on whether the sub-contractor is being paid through PAYE or as a sole trader. If they are paid through PAYE, the employer`s National Insurance contribution will be 13.8% of the employee`s earnings. If the sub-contractor is a sole trader, they will be responsible for their own National Insurance contributions.

It`s also important to note that National Insurance rates change from year to year. For example, in the 2021/22 tax year, the Class 1 National Insurance rate for employees is 12% on earnings between £9,568 and £50,270, and 2% on earnings above £50,270. Employers must also pay Class 1 National Insurance contributions on their employees` earnings, at a rate of 13.8% on earnings above the primary threshold of £9,568.

In summary, if you are hiring sub-contractors, you need to be aware of the different National Insurance rates and thresholds that apply to them. Factors such as their employment status and earnings will determine whether you are responsible for their National Insurance contributions. It`s important to stay up-to-date with changes to National Insurance rates to ensure that you are complying with the law and paying the correct amount.

Scroll to Top