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:
EXAMPLE
A Smith is paid monthly and receives £600 per month from
his contracted-out job and £300 per month from his not
contracted-out job. Total earnings are £900 per month and the
earnings period is monthly.
Employee’s NICs due: £32.6 (Table letter D) +
£30.00 (Table letter A)
Employer’s NICs due: £32.34 (Table letter D) +
£21.00 (Table letter A)
Recording the NICs due on form P11
NICs will be recorded on two separate forms P11. One P11
should be completed for the contracted-out NICs and one for the not
contracted-out NICs. Although two P11s should be kept, the end of
year totals should be recorded on one P14, with a separate entry
for both the contracted-out and not contracted-out NICs under their
appropriate contribution Table letters. For contracted-out NICs,
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 |
| 600 | 64.95 | 32.61 | 322 | 27.05 |
For not contracted-out NICs, 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 |
| 300 | 51.00 | 30.00 |
|
|
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 | |||||
| Contri-bution 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 |
| D | 7,200 | 779.40 | 391.32 | 3,864 | 324.60 |
| A | 3,600 | 612.00 | 360.00 |
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EXAMPLE
A Jones earns £900 a month in his contracted-out job,
and £110 & £95 a week in each of his not
contracted-out jobs. There are four weekly pay days in the month
for both not contracted- out jobs. The earnings period is monthly.
Monthly pay calculated as follows:
Contracted-out £900
plus
Not contracted-out
£110 x 4 = £440
£95 x 4 = £380
Total = £1720
Employee’s NICs due: £57.81 (Table letter D) +
£82.00 (Table letter A)
Employer’s NICs due: £71.34 (Table letter D) +
£82.00 (Table letter A)
Recording the NICs due on form P11
Again, NICs will need to be recorded on two separate forms
P11 with the end of year totals recorded on one P14, with a
separate entry for both the contracted-out and not contracted-out
NICs under their appropriate contribution Table letters. For
contracted-out NICs, 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 |
| 900 | 129.15 | 57.81 | 622 | 52.25 |
For not contracted-out NICs, 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 |
| 820 | 164.00 | 82.00 |
|
|
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 | |||||
| Contri-
bution 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 pounds only |
|
| Whole pounds only |
|
|
| 1a | 1b | 1c | 1d | 1e |
| D | 10,800 | 1,549.80 | 693.72 | 7,464 | 627.00 |
| A | 9,840 | 1,968.00 | 984.00 |
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