All examples on this page use the 2000/2001 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
P. Jones earns £1000 per month from his contracted-out
job and £200 per week from his not contracted-out job. There
are 4 weekly pay days in the month. Total earnings are £1,800
per month and the earnings period is monthly.
Employee’s NICs due: £56.36 (Table letter D) +
£80.00 (Table letter A)
Employer’s NICs due: £58.42 (Table letter D) +
£97.60 (Table letter A)
Employee’s NIC rebate due: £0.61
Employer’s NIC rebate due: £2.22
Recording the NICs due on form P11
NICs will be recorded on two separate P11s – one for
the contracted-out NICs and one for the not contracted-out NICs.
One form P14 should be completed at the end of the year showing two
separate entries – one for the contracted-out NICs and one
for the not contracted-out NICs under their appropriate
contribution Table letters. The entries on the P11 will be as
follows:-
For contracted-out NICs
| National Insurance contributions Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit | |||||||||||
| Earnings details | Contribution details | Rebate details | |||||||||
| Earnings at the LEL (where earnings reach or exceed the LEL) | Earnings above the LEL, up to and including the employee’s Earnings Threshold | Earnings above the
employee’s Earnings Threshold, up to and including the
employer’s Earnings Threshold
| Earnings above the employer’s Earnings Threshold, up to and including the UEL | Total of employee’s and employer’s contributions payable | Employee’s contributions payable | NIC rebate due on amount in column 1b | NIC rebate due on the sum of the amounts in columns 1b and 1c | ||||
| 1a | 1b | 1c | 1d | 1e | 1f | 1g | |||||
| 291 | 38 | 36 | 635 | 114 | 78 | 56 | 36 | 0 | 61 | 2 | 22 |
For not contracted-out NICs
| National Insurance contributions Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit | |||||||||
| Earnings details | Contribution details | Rebate details | |||||||
| Earnings at the LEL (where earnings reach or exceed the LEL) | Earnings above the LEL, up to and including the employee’s Earnings Threshold | Earnings above the employee’s Earnings Threshold, up to and including the employer’s Earnings Threshold | Earnings above the employer’s Earnings Threshold, up to and including the UEL | Total of employee’s and employer’s contributions payable | Employee’s contributions payable | NIC rebate due on amount in column 1b | NIC rebate due on the sum of the amounts in columns 1b and 1c | ||
| 1a | 1b | 1c | 1d | 1e | 1f | 1g | 1h | ||
| 0 | 0 | 0 | 800 | 177 | 60 | 80 | 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 (Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit) | ||||||||||
| NIC Table letter | Earnings at the LEL
(where earnings reach or exceed the LEL)
(whole £s only) | Earnings
above the LEL, up to and incl. The employee’s Earnings
Threshold
(whole £s only) | Earnings above the
employee’s Earnings Threshold, up to and incl. The
employer’s Earnings Threshold
(whole £s only) | Earnings
above the employer’s Earnings Threshold, up to and incl. The
UEL
(whole £s only) | Total of employee’s and employer’s contributions | Employee’s contributions payable | ||||
| 1a | 1b | 1c | 1d | 1e | 1f | 1g | ||||
| D | 3,492 | 456 | 432 | 7,620 | 1,377 | 36 | 676 | 32 | ||
| A | 0 | 0 | 0 | 9,600 | 2,131 | 20 | 960 | 00 | ||
| 1g/1h | 1I | 1j | ||||||||
| £ | p | £ | p | £ | p | |||||
| 33 | 96 | |||||||||
| NIC rebate due | Statutory Sick Pay | Statutory Maternity Pay | ||||||||
