EasyTaxLive.com

Stealth Taxation

America’s politicians keep finding ways to levy taxes without having to ask for voter approval or, for that matter, to even make them aware of what they (the politicians) are doing. This is both a politically useful and seemingly painless way of creating new taxes for favored programs that do not necessarily have the support of the public. The concept works because voters do not fully understand the process and are usually unaware of what is happening to them or when it happens.

It’s brilliant in its simplicity. The federal government requires the states to adopt certain programs or comply with various federal laws without providing the money to implement them. With a simple stroke of the pen, lawmakers are able to impose a wide variety of programs on the states at relatively little cost at the federal level.

Unfunded Mandates

The concept, which is generally known as “unfunded mandate,” is defined as “… a statute that requires government or private parties to carry out specific actions, but does not appropriate any funds for that purpose.”

The idea has been so successful that many states have imposed their own “unfunded mandates” on the cities and counties in their jurisdictions, which shifts the costs down to the local level, thereby creating another tax without voter approval.

“Unfunded mandates” date back to feudal times, when serfs were required to turn over a portion of their crops or earnings to their lords, who eventually “… insisted on the fulfillment of certain duties at the serfs’ own time and expense.” (Wikipedia)

Legislators resort to many tricks to impose taxes on an unsuspecting or ill informed public, but perhaps the most egregious is secrecy. And, “unfunded mandates” are generally adopted without most voters realizing what is happening, which is a form of stealth taxation.

States Resist

But, the states are becoming increasingly active in resisting such laws. In a study titled, “Home Rule: How States Are Fighting Federal Mandates,” by Thomas Atwood, The Heritage Foundation reported on the impacts of “unfunded mandates.” Among his many observations, Mr. Atwood noted:

>“Aurora, Colorado, for example, calculates that it will have to repair some 28,000 curbs in order to comply with the 1990 Americans with Disabilities Act (ADA) at an average cost of ,500 per curb.” (NOTE: With total projected revenue of 8.5 million and a capital budget of 6.1 million for 2006, it is clear that the 0 million cost of curb cuts is far more than the city can afford.)

>“…Anchorage, Alaska’s sewage inflow was so clean that the municipality could not meet Congress’s requirement that all sewage treatment facilities reduce incoming organic waste by at least 30 per cent. Still, the federal Environmental Protection Agency insisted that the city meet the arbitrary standard. Anchorage’s response was to arrange for two local fisheries to dump fish viscera into the river so the city could remove them.”

>“Arizona legislators have complained that the Clean Air Act is too strict even for the naturally occurring dust from Arizona’s deserts, let alone automobile emissions….”

>“….the U.S. Conference of Mayors recently reported that the Clean Water Act alone cost cities with populations greater than 30,000 more than .6 billion in 1993. From 1994 through 1998 the ten studied mandates will cost cities billion…”

Bolstered by a growing grassroots movement to reassert Constitutional limits on federal powers, the states are taking a variety of actions to resist the Federal government, including simply refusing to comply with Federal mandates they cannot fund.

Many states have also been passing their own legislation to combat Federal mandates, initiating lawsuits against the Federal government based on the Tenth Amendment and other Constitutional issues and suing to recover the costs of federally mandated programs for illegal immigrants.

But it remains to be seen just how much help the courts are likely to be in the states’ efforts to break free of the smothering grasp of the federal government. To date, they “have ruled that regulations set by federal agencies have the same force of law as associated legislation.”

Unfortunately, the core problem is the attitude of politicians that it’s acceptable to levy taxes by hiding them from public view, which will require far more to cure than litigating Constitutional issues. It will take an aroused, informed electorate that refuses to be bamboozled any longer and starts electing representatives who will truly represent their constituents and not just themselves. And, who knows how long that may take.

© 2007-08 Harris R. Sherline, All Rights Reserved

Construction – Accounting and Taxation

How does a contractor building a mixed – use condominium complex, faced with eye –pop – ping premium quotes from traditional insurance companies, insure his general and sub – contractors and still meet his margin – of profit target?

The answer lies in employing the versatility of an alternative risk vehicle, more commonly known as a captive. Set up as a division of the contractor’s parent company, the captive is closely held insurance company that is owned by the company and only insures its self-determined risks. Within a captive, specify types of policies, such as those that cover the risks associated ith general and sub- contractor issues can be established.

Captive and CCIP basis

Instead of paying for traditional insurance, a financially sound, well managed contracting company has the option of creating and owning its own insurance company, an option that comes with many benefits. Unlikely self –insurance, a captive protects against risk, may allow for tax – deductible premiums, controls claims, and retains the profits for its owners. In essence, risks are transferred to the captive. The owners of the captive determine the types and degree of covered risks, ownership structure, costs, and profit-taking. Since premiums are paid directly to the captive, owners reap the benefits and keep the profits of the captive insurance company themselves.

Within the captive, a contractor – controlled insurance policy (CCIP) “ wraps –up” or sets up a single insurance policy, which specifically names all the construction participants for coverage on a given project. A CCIP provides seamless coverage and simplifications claims resolutions between generals and subs. The coverage is generally broader than a traditional policy and litigation can be held to a minimum. …….Cont.

To know more about CONSTRUCTION – ACCOUNTING AND TAXATION and how a CONTRACTOR CONTROL INSURANCE POLICY t please refer to http://riskmgmtadvisors.com/

 

 

Self Employment Taxes – How The Taxation System Works!

Self employed people in the United States feel differently when it comes to having to shrug out hard earned cash in the form of taxes. Self employed individuals have to pay as much tax as an employer and an employee combined – so much for helping the unemployment scenario in the country!

This is a give and take situation. The US government allows self employed individuals a lot of deductions on their taxes. These taxes may be so high that people think twice before taking up any self employment opportunities. Entrepreneurs in the US claim that the government is indulging in the biggest fraud ever by imposing huge taxes on self employed individuals and then giving them tax deductions. This amounts to them having to pay a set amount of taxes anyway – so why not do away with the deductions and lower the taxes charged in the first place?

So far as Medicare and Social security taxes are concerned if your income crosses 0 you are liable to pay more than 15% of your income as tax to the government. That is 15% over and above the usual income tax self employed individuals are expected to shrug out. And then if you own your home you will find that you are paying the government more than half your total income in the form of taxes.

Self employed people argue that this is a very unfair level of taxation and is not encouraging at all for people who want to get into self employment in the United States. Countries like Spain and Italy have self employment taxed designed in a way that will encourage their citizens to seek self employment and in a way help ease the unemployment situation in the country.

When you get into self employment you will be lucky to earn a little over 0,000 in the first year. You will not have to pay the 12% Social Security tax on the amount that exceeds the 100,000 this is a saving but you will have to pay the Medicare part of the tax. Then when you are calculating the income tax part of your taxes you can deduct a half of the taxes from your self employment taxes –these are significant savings on the tax front.

Claiming rent deductions for a home office is another way of saving on taxes. Just calculate the annual rental for the home office and deduct it from your income. This is considered as an expense – but then the government will tax you on an income from your property, anyway it still saves you a few bucks in the long run.

So if you do diligent research you will find that there are many ways you can save on taxes you would normally pay as a self employed person. But then it all calls for additional effort and time – why not just do away with the deductions and lower the taxes?

Stealth Taxation – Part III

Finding ways to tax Americans without their being aware of it seems to be the name of the game for politicians and bureaucrats, and generally what should be readily transparent to taxpayers is deliberately obscured.

For example, we usually don’t think of the fines that are generated by our local police or sheriff’s department for traffic and other infractions as taxes – or, city and county fines for violations of building codes, or OSHA fines for workplace safety violations, or FCC fines for inappropriate radio and TV programming. Many of these fines can be exceedingly harsh, especially for small businesses or non-profits, many of which have a hard time staying afloat.

Just about every government agency levies some sort of fines for infractions of various rules. And, although estimates of potential revenue from these sources are included in the annual budgets of most government agencies, they are really just another form of stealth taxation. As far as I know, other than city councils, county boards of supervisors and the like, not one citizen of any community ever has the opportunity to vote on them.

Property has often been confiscated and sold, even though the owner was not involved in anything criminal, and they did not have to be accused or charged with a crime. The police have been able to go to court and, without a trial, obtain a court order to confiscate and sell the property of someone who was suspected of a drug crime. The mere fact that the property was involved in some way has been sufficient. The theory that makes this possible is based on “a technicality in the law that allows the government to claim that it is suing only the item of property, not the property’s owner.”

Even if that’s justice, what happens to the money?

Between 1991 and 1995, Federal confiscation of property under the forfeiture laws increased by 1500 percent, to a total of 4 million. And, seizure of property by state and local governments also amounted to hundreds of millions of dollars.

But the amount of money that’s generated by forfeiture laws is only a small part of the total funds received by government from fines and penalties, ranging from the lowly citation for illegal parking to major penalties imposed by agencies such as the SEC, FCC, etc. For example, in 2004, Time Warner agreed to a settlement with the Securities and Exchange Commission (SEC) that included a 0 million fine. And, in 1995 the international accounting firm KPMG agreed to pay a 6 million fine to the SEC in a case that involved tax shelter investments.

When an agency takes in a fine amounting to hundreds of millions of dollars, the money disappears into the black hole of government accounting, and no one ever seems to ask what happened to it.

The explanation usually given is that these fines are levied to recover the costs of investigation and enforcement incurred by the agency involved. However, funding of government agencies does not appear to be reduced by the fines and penalties it collects in excess of those amounts that may be built into their budgets. If that’s the case and the investigating agency recovers more than the amount of revenue budgeted from this source, why isn’t their funding reduced accordingly?

If you think about it, fines and penalties are actually another form of stealth taxation: first the public is taxed to fund the operation of an agency, law enforcement, regulatory, etc. And, when revenue from fines exceeds budgeted amounts, instead of using the excess to offset operating expenses, the money is used for some other purpose. At the very least, the public pays the cost again by virtue of the fines that are not applied to help cover the costs of funding the agencies involved by a like amount.

Another interesting fact is that fines and penalties are not tax deductible. When violators, corporate or individual, pay their income taxes, in effect they pay additional taxes on the amount of the penalty that has been imposed because it cannot be included as part of the cost of doing business. Thus, a 0 million corporate fine could actually amount to something on the order of 0 million (0 million plus 0 million tax).

When it comes to finding ways to fleece taxpayers without their even being aware of it, politicians and bureaucrats are usually found at the head of the class.

But, that’s just my opinion.

©2008 Harris R. Sherline, All Rights Reserved

NOTE: Read more of Harris Sherline’s commentaries on his blog at “opinionfest.com.”

Related Taxation Articles

Registering Self Employment And The Self Assessment Tax Return Form

The first action by anyone self employed in business in regard to his self assessment tax return is to register that self employment with the inland revenue. Self employment must be registered within three months of starting business to avoid a late registration penalty fine of 100 pounds. Not all income outside the paye system is considered to be self employment.

There is no strict definition of self employment as opposed to not being self employed however the basic rule is if you have income other than is taxed under the paye system then you may be self employed. If this income is irregular and not part of an ongoing business then you are probably not self employed as such. An alternative to registering as self employed would be to request the Inland Revenue to issue a tax return and declare the additional untaxed income under the category of any other income.

If the income is received on a regular basis or is income from a recognisable business or repeated activity then it is likely that business would be classed as self employed. And being self employed you do need to register for self employment within three months as a consequence of which you would receive an inland revenue self assessment tax return to complete each year. If you have any doubts about the status of the income being taxable as any other income or under the self assessment tax return then you should contact the Inland Revenue helpline for further advice.

Completing the self assessment tax return is not the most difficult thing in the world although many people who are self employed prefer to leave the task to a tax accountant. While many items on the tax return form involve details of income and expenses which require little knowledge of accounting there are areas which require some understanding of the tax system.

The inland revenue self assessment form can be completed if the accompanying notes are read thoroughly and those notes that are sent out each year with the tax return are understood and changes from the previous year noted. Most of the notes are quite straight forward although to anyone inexperienced in tax matters the sections on capital tax allowances can appear daunting.

The self assessment tax return form consists of 4 supplementary pages which are attached to the main annual tax return. The return is broken down into various sections of business details, capital allowances, income and expenditure, tax adjustments and finally a balance sheet section which is optional.

The business details section is quite straight forward registering the name, address, description of the business and the relevant accounting dates. It is recommended that new start up businesses submit their first accounts from the date of commencement to the end of the tax year being 5 April.

If you are self employed then you can choose not to adopt the standard financial tax year of 6 April to 5 April although this is not recommended. By choosing a different tax year to the standard financial year the accounts will cross over more than one tax year and in doing so if the tax rules have changed which they do frequently then more than one set of tax rules could be applicable. And if more than one set of tax rules is applicable then individual entries in the accounts become time sensitive.

The capital allowance section of the self assessment return involves maintaining records of fixed assets purchased and applying the tax rules relating to fixed assets. These tax rules involve claiming a first year allowance on most non vehicle assets in the year they are purchased and writing down allowance thereafter. Commercial vehicle purchases are also subject to a first year allowance while non commercial vehicles can receive writing down allowance of 25% in the first year restricted to 3,000 pounds.

The income and expenditure section is straighter forward for the non accountant requiring a statement of the income and expenses incurred during the financial year. Accurate records should be maintained including receipts for everything to support the figures being declared.

The next sections of tax adjustments do require at least a minimum knowledge of the tax system. Knowledge of what is allowed and disallowed and what adjustments can be made regarding apportionment of net profit to produce an annual net taxable profit plus adjustments for previous years losses.

The final section of the self assessment tax return form is the balance sheet. Only those self employed businesses that produce a balance sheet need complete this section which is optional. And even those businesses that have produced a balance sheet need not complete this section if they do not wish to.

Find More Inland Revenue Articles

Self Employment Registration and the Self Assessment Tax Return Form

There is no strict definition of self employment as opposed to not being self employed however the basic rule is if you have income other than is taxed under the paye system then you may be self employed. If this income is irregular and not part of an ongoing business then you are probably not self employed as such. An alternative to registering as self employed would be to request the Inland Revenue to issue a tax return and declare the additional untaxed income under the category of any other income.

The first action by anyone self employed in business in regard to his self assessment tax return is to register that self employment with the Inland Revenue. Self employment must be registered within three months of starting business to avoid a late registration penalty fine of 100 pounds. Not all income outside the paye system is considered to be self employment.

If the income is received on a regular basis or is income from a recognisable business or repeated activity then it is likely that business would be classed as self employed. And being self employed you do need to register for self employment within three months as a consequence of which you would receive an inland revenue self assessment tax return to complete each year. If you have any doubts about the status of the income being taxable as any other income or under the self assessment tax return then you should contact the Inland Revenue helpline for further advice.

Completing the self assessment tax return is not difficult although many people who are self employed prefer to leave the task to a tax accountant. While many items on the self assessment tax return involve details of income and expenses which require little knowledge of accounting there are areas which require some understanding of the tax system.

The inland revenue self assessment tax return can be completed if the accompanying notes are read thoroughly and those notes that are sent out each year with the tax return are understood and changes from the previous year noted. Most of the notes are quite straight forward although to anyone inexperienced in tax matters the sections on capital tax allowances can appear daunting.

The self assessment tax return form consists of 4 supplementary pages which are attached to the main annual tax return. The return is broken down into various sections of business details, capital allowances, income and expenditure, tax adjustments and finally a balance sheet section which is optional.

The business details section of the self assessment tax return form is quite straight forward registering the name, address, description of the business and the relevant accounting dates. It is recommended that new start up businesses submit their first accounts from the date of commencement to the end of the tax year being 5 April.

If you are self employed then you can choose not to adopt the standard financial tax year of 6 April to 5 April although this is not recommended. By choosing a different tax year to the standard financial year the accounts will cross over more than one tax year and in doing so if the tax rules have changed which they do frequently then more than one set of tax rules could be applicable. And if more than one set of tax rules is applicable then individual entries in the accounts become time sensitive.

The capital allowance section of the self assessment tax return form involves maintaining records of fixed assets purchased and applying the tax rules relating to fixed assets. These tax rules involve claiming a first year allowance on most non vehicle assets in the year they are purchased and writing down allowance thereafter. Commercial vehicle purchases are also subject to a first year allowance while non commercial vehicles can receive writing down allowance of 25% in the first year restricted to 3,000 pounds.

The income and expenditure section is straighter forward for the non accountant requiring a statement of the income and expenses incurred during the financial year. Accurate records should be maintained including receipts for everything to support the figures being declared.

The next sections of tax adjustments do require at least a minimum knowledge of the tax system. Knowledge of what is allowed and disallowed and what adjustments can be made regarding apportionment of net profit to produce an annual net taxable profit plus adjustments for previous years losses.

The final section of the self assessment tax return form is the balance sheet. Only those self employed businesses that produce a balance sheet need complete this section which is optional. And even those businesses that have produced a balance sheet need not complete this section if they do not wish to.

Taxation in the International Marketplace

The global marketplace is an increasingly competitive arena in which countries are making tax concessions in order to attract multinational corporations. In order to stay competitive with the rest of the world the United States must take a closer look at their taxation laws and amend them as conditions warrant.

The article Overhauling the Old Jalopy by The Economist (No author identified) is about the increasing problem of high corporate taxes in the United States versus countries overseas. Hank Paulson the treasury secretary recently held a summit in Washington D.C. to address the fact that “our system is visibly lacking behind the best practices in the rest of the world.” The article states that “If headline tax rates were all that mattered, America would be an unattractive place for companies to locate.” In fact America’s corporate tax rate of 35 percent, 39 percent when state tax is added is the second highest in the Organization of Economic Cooperation and Development (OECD). These high tax rates make a significant difference in where multinational corporations record profits and business is done.

The problem facing those who want to overhaul our current corporate tax system is the current political climate and trends towards reducing the middle class tax liability while increasing tax liability for the rich. The last thing the American public wants to see is lower taxes for multinational corporations. However the lack of the American people’s willingness to accept a corporate tax cut lies in a lack of education. A study conducted by Kevin Hassett and Aparna Mathur of the American Enterprise Institute showed that a 1 percent increase in corporate tax rates result in a 0.8 percent cut in manufacturing workers wages. The study showed that in reality high corporate taxes are taking “a toll on the common man.”

We now live in a truly international marketplace in which the world has never seen the likes of before. In this marketplace the competition is fierce for multinational corporations to find ways to cut costs and stay ahead of the competition. This article brings to light a facet of the new international marketplace that many don’t think of, taxation. With it becoming easier than ever for corporations to move across international lines, the tax code may become a major player in where a company decides to headquarter itself and declare profits. If the United States does not stay competitive with the rest of the world we may start to see corporations move their headquarters off our shores to reduce their tax liability. As countries lower corporate tax rates to attract more international business for example China at 25 percent and Ireland at 13 percent, (Overhauling the Old Jalopy by The Economist) the United States become increasingly less attractive to both investors and to corporations who are already here.

Hopefully our citizens and politicians will soon realize that there are more to tax cuts than what we are immediately exposed too, and that to continue to ignore the fact that US corporate tax rates are well above the standard set by the rest of the world will do nothing but stifle growth in our country. In order to attract and keep business in the United States we must make business attractive in the United States.

References:

Overhauling the Old Jalopy. (2007, August 2). The Economist. Retrieved August 7, 2007, from The Economist
Web site : http://www.economist.com/finance/PrinterFriendly.cfm?story_id=9596317

Michigan Taxation Law

Taxation Law in Michigan

There are more than 52 taxes from both the state and local entities in Michigan, but they all fall into one of the five main types of taxes levied against individuals or businesses. These are

Income taxes

Sales taxes

Property taxes

Transportation taxes

Business and privilege taxes.

Through these, the state of Michigan and the local governments earn enough money to support the public programs and services offered.

The most well known tax is the state and local sales tax. Since every individual and business makes purchases, all residents and nonresidents of Michigan pay this tax. The income taxes are those placed upon earnings. Closely resembling the federal income tax, these are the most well known next to the sales tax.

The business and privilege taxes are those paid by businesses and for gambling. These also include various service taxes for statewide services. Since business taxes can be very complicated, many businesses have in house accountants or they seek outside assistance in the filing.

Transportation taxes are included in the price of gasoline, vehicle registration, other types of transportation, and fuel. Income from these is used in the building and maintenance of roadways.

The last category of Michigan taxes includes some of the most hotly contested taxes. Property taxes include those levied on property for the state and local education funds, utilities, real estate transfers, and estate taxes. Many also call estate taxes death taxes as they are levied on an estate after a death.

To learn more about Michigan Taxation Law please contact Demorest Law Firm.

How Much is Tax on Income, Tax Percentage Rates and Income Returns

Income tax is deducted by an employer from the gross salary of an employee according to the inland revenue tax percentage applicable to those earnings taking into account personal tax allowances and reliefs available.

Income Tax percentage rates for Employees

All employers in the UK pay employees through the inland revenue tax PAYE system and are required to deduct both tax on income and national insurance contributions from the gross wages. The net wages received are by the employee after the PAYE deductions.

Gross pay is the total amount the employee has earned in that pay period including the basic wages plus any tips or bonuses received but excluding non taxable expenses. The gross pay on which an employee is assessed from tax and national insurance includes taxable benefits received by that employee such as private medical care or the provision of a company car. Non taxable expenses being business expenses the employee has incurred carrying out the duties which are reimbursed by the employer.

Having established the total gross pay the employer calculates how much is tax on income and deducts tax on a cumulative basis taking into account the employee personal allowance indicated by the tax code. Business expenses incurred by an employee which are not reimbursed by an employer may be claimed as a tax relief. Such items might include the difference between the UK allowance on mileage of 40p per mile and the amount paid by an employer is less than 40p and also working from home expenses.

The tax code tells the employer how much is the UK allowance to free pay the employee is entitled to in the financial year. For example a 2008 tax code of 603L would indicate annual tax free earnings of £6,035. That does not mean the employee will not be deducted tax until earnings reach that figure as when calculating the tax on income the employer is required to spread the tax free allowance evenly over the pay periods.

On earnings above the tax free allowance the 2008 tax percentage is 20 per cent up to what is known as the higher earnings threshold which under 2008 tax rules is £34,800 per annum. Gross salary which is above the higher earnings threshold is subject to a 2008 tax rate of 40 per cent.

In addition to the tax on income deducted by an employer under the tax inland revenue PAYE scheme other income is also taxable and declared on the annual tax income returns. Items declared on the income returns would include income from savings, dividend income, pension and trust income, any rental income and self employed earnings. Working tax credits are not classed as taxable income.

Determining how much is tax on income from savings is achieved by applying the income tax percentage applicable after deducting gross earnings from the tax inland revenue threshold limits. If non savings income is less than the £2320 starting rate for savings or if savings and dividend income is the only source of income then the savings income tax percentage is 10 per cent up to the &pound2,320. If non savings income is above the starting rate then all of savings are taxed at the 20 per cent basic rate.

When earnings exceed the higher tax threshold of &pound34,800 the income tax percentage on savings increases from 20 per cent to 40 per cent and on dividends from 10 per cent to 32.5 per cent. In effect how much is tax is determined by the highest tax percentage applicable to income.

National Insurance for Employees

While tax on income is calculated on a cumulative basis national insurance contributions are calculated as a percentage of gross salary in a specific pay period under the tax inland revenue system.

Employees under the age of 16 or over the national pension age of 65 do not pay national insurance, they are exempt. There are other circumstances where an employee pays a different rate of national insurance. For example a married woman who is widowed and possess a certificate may pay national contributions at the rate of 4.85 per cent of gross wages on earnings above the primary starting threshold. Employees with a second job where the earnings are above the upper earnings threshold would only pay 1 per cent insurance.

For most people who are employed the national insurance contribution is according to the rates set in table a and the amount payable is 11 per cent of gross earnings about the primary threshold and on all earnings up to the upper earnings threshold from which point the percentage drops to 1 per cent. In 2008-09 the primary threshold is £105 per week.

More Inland Revenue Articles

National Insurance Contributions and National Insurance Card Taxes

National insurance contributions are paid by all employees over the age of 16 whose gross income exceeds the national insurance threshold and forms part of the taxes collected by the inland revenue. Employers also pay additional NI contributions. In years gone by there was not a record of being registered for taxes and national insurance but an actual national insurance card upon which were affixed stamps each week.

National Insurance Card – Providing Social Security Benefit

A NI Card is provided at the age of sixteen when we begin paying insurance independently of our parents or guardians. Employees under the lower age limit of 16 are exempt from national insurance contributions. It is a card which symbolises the system of taxes and social security benefits in U.K contains your unique NI number used to pay your NI contributions through, as long as you are resident in the UK. It was developed and is still controlled by the Inland Revenue and HM Revenue and Customs to provide the government, as well as consumers easy ways of paying taxes and is something that can be a similar technique to help you in business should you wish to start one. It was introduced keeping in mind the national insurance act of 1908 during the time of government expansion.

Taxes generally are made up of the tax paid by your employees, company earnings and other kind of benefits provided by the government and such taxes can also be termed as National Insurance Contributions. Any previous record of your contributions e.g. employment history are generally used to determine the availability and amount of benefit to be paid through taxes and this is where the NI Card is used by the Inland Revenue and HM Revenue and Customs.

National Insurance and Your Small Business

In business, the Government can keep your business declarations filed under your unique national insurance number to record your profit and losses and of course the amount of tax you and your business have paid because everything needs to be registered along with your NI number. The National Insurance Card is beneficial for you both personally and in business as it acts as evidence of your transactions and payments where taxes and contributions are concerned. Other countries have their own variations of a National Insurance Card but here in the UK it can be an additional item that acts as proof of your residential or working status. Employees from Outside the UK

The section of HM Revenue and Customs that deal with personal aspects of insurance contributions is the Department of Work Pensions also look after people who have come to the UK to find work and want to acquire National Insurance card. In any business where you plan to take on employees either temporarily or otherwise, you must always take the national insurance number from the employee in order to both identify the person and check their working status- in some cases a person may not be allowed to work for longer that a time specified by the Inland Revenue. It will also allow you to pay the correct percentage of their national insurance contributions and taxes. It is a good idea to obtain a copy of the passport in cases where your employees have not yet received a national insurance number or indeed do not yet know it.

More Inland Revenue Articles