Sarah Bradford highlights the National Insurance contributions rules that apply to company directors.
Company directors are a special case when it comes to Class 1 National Insurance contributions (NICs).
As the scope of a director to influence the time and amount of their earnings is greater than for other employees, directors have an annual earnings period. Were this not the case, a director could significantly reduce both the primary and secondary NICs liability by making irregular payments of earnings to benefit from the non-cumulative nature of NICs and minimise the contributions payable at the 12% rate. The following example highlights how the way in which payments are made can affect the National Insurance liability.
Example 1: Regular salary vs bonus
Bill is paid an annual
