All examples on this page use the 1998-99 rates and
earnings bands. NICs are worked out using the exact percentage
method and are based on the employee being a member of a
Contracted-Out Salary Related (COSR) scheme.
When calculating NICs, priority is given to the
contracted-out earnings. NICs are worked out on the total earnings
using the shortest earnings period of the contracted-out
employment(s).
Employee’s NICs are worked out at the:
Employer’s contributions are worked out at the appropriate
not contracted-out rate on the total earnings (including the
contracted-out earnings)
EXAMPLE
C. Brown earns £45 per week from his contracted-out job,
and £110 per week from his not contracted-out job. Total
earnings are £155 per week and the earnings period is weekly.
Employee’s NICs due : £10.38 (Table letter A)
Employer’s NICs due : £10.85 (Table letter A)
Recording the NICs due on form P11
NICs will be recorded under contribution Table letter A on
one form P11 with the end of year totals, again under contribution
Table letter A, on one P14. The entries on the P11 will be as
follows:-
| National Insurance contributions | ||||
| Earnings on which employee's contributions payable | Total of employee's and employer's contributions payable | Employee's contributions payable | Earnings on which
employee's contributions at contracted-out rate payable included in
1a
| Employee's contributions at contracted-out rate included in 1c |
| Whole pounds only |
|
| Whole pounds only |
|
| 1a | 1b | 1c | 1d | 1e |
| 155 | 21.23 | 10.38 |
|
|
Recording the end of year totals on form P14
(The entries below assume the level of earnings remained
unchanged throughout the year)
| National Insurance contributions in this employment | |||||
| Contribution Table letter | Earnings on which employee’s contributions payable | Total of Employee’s and Employer’s contributions payable | Employee’s contributions payable | Earnings on
which employee’s contributions at Contracted-out rate payable included in 1a | Employee’s contributions at Contracted-out rate included in 1c |
|
| Whole £s only |
|
| Whole £s only |
|
|
| 1a | 1b | 1c | 1d | 1e |
| A | 8060 | 1,103.96 | 539.76 |
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