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:
Employer’s contributions are worked out at the appropriate not contracted-out percentage rate on earnings above the ET.
EXAMPLE
C Watson receives £300 per month from his contracted-out
job and £200 per month from his not contracted-out job. Total
earnings are £500 per month and the earnings period is
monthly.
Employee’s NICs due: £1.18 (Table letter D) +
£20.00 (Table letter A)
Employer’s NICs due: £16.96 (Table letter A)
Employer’s NIC rebate due: £0.42
Recording the NICs due on form P11
NICs will need to 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 separate entries
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 up to and
including the LEL (where earnings reach or exceed the LEL)
| Earnings above the LEL, up to and including the Earnings Threshold | Earnings above the Earnings Threshold, up to and including the UEL | Total of employee’s and employer’s contributions payable | Employee’s contributions payable | Employer’s NIC rebate due on amount in 1b | |||
| Whole pounds only | Whole pounds only | Whole pounds only |
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| 1a | 1b | 1c | 1d | 1e | 1f | |||
| 286 | 14 | 0 | 1 | 18 | 1 | 18 | 0 | 42 |
For not contracted-out NICs, the entries on the P11 will be as follows:-
| National Insurance contributions | ||||||||
| Earnings up to and
including the LEL (where earnings reach or exceed the LEL)
| Earnings above the LEL, up to and including the Earnings Threshold | Earnings above the Earnings Threshold, up to and including the UEL | Total of employee’s and employer’s contributions payable | Employee’s contributions payable | Employer’s NIC rebate due on amount in 1b | |||
| Whole pounds only | Whole pounds only | Whole pounds only |
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| 1a | 1b | 1c | 1d | 1e | 1f | |||
| 0 | 61 | 139 | 36 | 96 | 20 | 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 | ||||||
| NIC Table letter | Earnings up to and
including the LEL (where earnings reach or exceed the LEL)
| Earnings above the LEL, up to and including the Earnings Threshold | Earnings above the Earnings Threshold, up to and including the UEL | Total of employee’s and employer’s contributions | Employee’s contributions payable | Employer’s NIC rebate due on amount in 1b |
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| Whole pounds only | Whole pounds only | Whole pounds only |
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| 1a | 1b | 1c | 1d | 1e | 1f |
| D | 3,432 | 168 | 0 | 14.16 | 14.16 | 5.04 |
| A | 0 | 732 | 1,668 | 443.52 | 240.00 |
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