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 NICs are worked out at the highest not
contracted-out percentage rate on the total earnings.
EXAMPLE
P. Roberts earns £485 per week from his not
contracted-out job and £60 per week from his contracted-out
job. Total earnings are £545 per week and the earnings period
is weekly.
Employee’s NICs due: £43.38 (Table letter A)
Employer’s NICs due: £54.50 (Table letter A)
Recording the NICs due on form P11
NICs will be recorded under contribution Table letter A on
one form P11 and the end of year totals on one form P14, again
under contribution Table letter A. 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 |
| 485 | 97.88 | 43.38 |
|
|
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 | |||||
| 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 |
| A | 25,220 | 5,089.76 | 2,255.76 |
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