Employee NI questions

[Bobwood]

As I understand it, for a normal employee in a PAYE situation, NI is currently 12% up to the Upper Earnings Limit (£967 per week), and 2% on earnings above this.

Imagine someone who has two jobs, each paying £60k per year.

I have two questions:

1. How does HMRC know about the two jobs and that whilst one will pay NI at 12% up to the Upper Earnings Limit and 2% above that, the second should only pay 2% across the whole £60k

2. What happens if both payrolls pay employee's NI based on 12% up to the Upper Earnings Limit, and 2% thereafter? Self Assessment is only concerned with tax (in regard to employment) I think, so has does one get a refund?

Thanks in advance.

[Urbandreamer]

The, I hope obvious, answer to how HMRC know about two jobs is something called the National Insurance number. It is used to record your entitlement for things like the state pension.

As for the mechanism of collection applied, I'm afraid that I don't work in Payrol. However it is my understanding that a companies payrol department exchanges information with HMRC and are responsible for paying HMRC both income tax and National insurance on behalf of the companies employees and the company itself.

I believe that the same mechanism is used to enable the correct level of taxation (i.e two salaries adding up to higher rate tax and possibly additional NI).

The law requires employers to issue a form known as a P60 each year detailing deductions and HMRC usually inform PAYE employees of their expected tax code (tax band) once a year.

[Lootman]

The, I hope obvious, answer to how HMRC know about two jobs is something called the National Insurance number. It is used to record your entitlement for things like the state pension.

As for the mechanism of collection applied, I'm afraid that I don't work in Payrol. However it is my understanding that a companies payrol department exchanges information with HMRC and are responsible for paying HMRC both income tax and National insurance on behalf of the companies employees and the company itself.

I believe that the same mechanism is used to enable the correct level of taxation (i.e two salaries adding up to higher rate tax and possibly additional NI).

The law requires employers to issue a form known as a P60 each year detailing deductions and HMRC usually inform PAYE employees of their expected tax code (tax band) once a year.

Yes and the same issue arises if you change jobs during the year. And that is the point of the P60 - so that the new employer does not over-charge tax or NI.

Then again I have not changed jobs since 1996 so I might be out of date on this.

[Bobwood]

Thank you both, but that doesn't help actually, as I'm asking about NI not tax.

In the situation I outline, two salaries from two different companies, that person's Self Assessment would indeed show the info from two P60s and a tax refund be made. BUT Self Assessment and P60s apply only to income tax in this regard, not National Insurance. Look at a P60, no reference to NI (go look at one). Look at Self Assessment, no reference to NI (again, check an old one).

I have a feeling HMRC pick up the discrepancy after the end of the tax year and write to the individual telling them to complete a specific form to get the refund, but I don't have the details. This is what I am hoping someone with the experience or knowledge can describe.

[fisher]

I seem to remember that NI is worked out on an individual employment basis. If you have more than 1 employment each is treated distinctly. In your example this means the person will pay two lots of NI at the higher rate 12%. It can also mean that with 2 employments that are individually below the primary threshold you receive no NI credit even though adding the two together would take you over the threshold. It's all a little antiquated.

This is just what I remember from years ago and I may misremember or it may have changed but somehow I don't think so!

[swill453]

Thank you both, but that doesn't help actually, as I'm asking about NI not tax.

In the situation I outline, two salaries from two different companies, that person's Self Assessment would indeed show the info from two P60s and a tax refund be made. BUT Self Assessment and P60s apply only to income tax in this regard, not National Insurance. Look at a P60, no reference to NI (go look at one). Look at Self Assessment, no reference to NI (again, check an old one).

It's a while since I had a P60, but googling for a picture of one certainly shows it has a section for NI contributions. There's one here, for example: https://osome.com/uk/blog/p60-form-uk-w ... l-with-it/

Scott.

[Gersemi]

Basically NI is calculated separately on each employment. There are special rules where the employers are "associated"

Have fun reading all about it at:

https://www.gov.uk/hmrc-internal-manual ... l/nim10000 onwards

[bluedonkey]

I have dealt with this in the past. You have to submit a NI form to claim a repayment.
https://www.gov.uk/claim-national-insurance-refund

It's not dealt with through self assessment.

[dealtn]

Thank you both, but that doesn't help actually, as I'm asking about NI not tax.

In the situation I outline, two salaries from two different companies, that person's Self Assessment would indeed show the info from two P60s and a tax refund be made. BUT Self Assessment and P60s apply only to income tax in this regard, not National Insurance. Look at a P60, no reference to NI (go look at one). Look at Self Assessment, no reference to NI (again, check an old one).

I have a feeling HMRC pick up the discrepancy after the end of the tax year and write to the individual telling them to complete a specific form to get the refund, but I don't have the details. This is what I am hoping someone with the experience or knowledge can describe.

I have looked at two (not one). They both have NI clearly on them.

[swill453]

I have looked at two (not one). They both have NI clearly on them.

I think there's a specific P60 format for pension-only income, which doesn't mention NI contributions because they don't apply.

The P60 for employment income has the NI section.

Scott.

[dealtn]

I have looked at two (not one). They both have NI clearly on them.

I think there's a specific P60 format for pension-only income, which doesn't mention NI contributions because they don't apply.

The P60 for employment income has the NI section.

Scott.

This being a "practical" board it was a response to the situation of a normal "employee" with 2 employers though. But I agree that situation might be why the OP is confused.

[Bobwood]

Firstly apologies for going awol after posting a question. My absence was due to circumstances beyond my control.

Apols again for thinking a P60 does not show NI, because it does (if any has been paid). I had been looking at a P60 for only unearned income, which does not show it (as none has been paid).

From what I've read here, and from talking to a colleague in the same situation, we have the same two employers in common, each will assume they are the only employer and hence charge NI from the ground up. Then at the end of the tax year, a part of HMRC in the North-East (ie not the self assessment/income tax part) contacts you by letter and offers a refund of the overpayment based on what the two earned incomes should have paid in aggregate. As I understand it, this does not result from anything to do with Self Assessment, hence it being the NI part of HMRC which I understand is based up near (or in) Newcastle.

I assume that in advance of waiting to be contacted, or if never contacted, the link kindly supplied by bluedonkey can be used.

[Charlottesquare]

The, I hope obvious, answer to how HMRC know about two jobs is something called the National Insurance number. It is used to record your entitlement for things like the state pension.

As for the mechanism of collection applied, I'm afraid that I don't work in Payrol. However it is my understanding that a companies payrol department exchanges information with HMRC and are responsible for paying HMRC both income tax and National insurance on behalf of the companies employees and the company itself.

I believe that the same mechanism is used to enable the correct level of taxation (i.e two salaries adding up to higher rate tax and possibly additional NI).

The law requires employers to issue a form known as a P60 each year detailing deductions and HMRC usually inform PAYE employees of their expected tax code (tax band) once a year.

Yes and the same issue arises if you change jobs during the year. And that is the point of the P60 - so that the new employer does not over-charge tax or NI.

Then again I have not changed jobs since 1996 so I might be out of date on this.

P45 not P60 but does nothing to notify new employer re NI, only tax.

[Urbandreamer]

Yes and the same issue arises if you change jobs during the year. And that is the point of the P60 - so that the new employer does not over-charge tax or NI.

Then again I have not changed jobs since 1996 so I might be out of date on this.

P45 not P60 but does nothing to notify new employer re NI, only tax.

This was in reference to having two jobs at once, rather than one followed by another.
viewtopic.php?p=631850#p631850

Imagine someone who has two jobs, each paying £60k per year.

Hence you would have two P60's, not a P45 followed by a P60.

I had assumed that the phrase might be "had two jobs" were the latter the case.

[Bobwood]

Indeed, it's "has" not "had". Two jobs, two salaries, two P60s (no P45s).

Tax Codes are (relatively) easy as you can instruct each employer, with help from HMRC, what code to use. Any inaccuracies then all come out in the wash, retrospectively, when you self-assess.

That's my point.

With NI there is no self-assessment process, hence asking the questions in my original post, which I now think I have the answer to (as per my previous post).