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:
EXAMPLE
J. Thomas earns £450 per month from his not
contracted-out job, and £600 per month from his contracted-out
job. Total earnings are £1,050 per month and the earnings
period is monthly.
Employee’s NICs due: £16.40 (Table letter A) +
£50.40 (Table letter D)
Employer’s NICs due: £10.86 (Table letter A) +
£55.20 (Table letter D)
Recording the NICs due on form P11
NICs will need to be recorded on two separate forms P11 and
the end of year totals on one P14, with a separate entry for both
the contracted-out and not contracted-out NICs under their
appropriate contribution Table letters. 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 | |||
| 286 | 75 | 89 | 27 | 26 | 16 | 40 | ||
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 | |||
| 0 | 0 | 600 | 105 | 60 | 50 | 40 | ||
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 £s only | Whole £s only | Whole £s only |
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| 1a | 1b | 1c | 1d | 1e | 1f |
| A | 3,432 | 900 | 1,068 | 327.12 | 196.80 |
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| D | 0 | 0 | 7,200 | 1,267.20 | 604.80 |
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