NIM10029 – Aggregation of Earnings: Calculation & recording: NICs due at contracted-out & not contracted-out rate: No Appropriate Personal Pension (APP) in place: Contracted-out earnings do not reach LEL but total earnings do: 1999/2000 Tax year

All examples on this page use the 1999/2000 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 appropriate not contracted-out percentage rate on earnings above the LEL and up to and including the UEL. Employer’s contributions are worked out at the appropriate not contracted-out percentage rate on the total earnings above the ET.

EXAMPLE

P. Wilson 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: £8.90 (Table letter A)

Employer’s NICs due: £8.78 (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:-

Recording the end of year totals on form P14

(The entries below assume the level of earnings remained unchanged throughout the year)