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 appropriate
contracted-out percentage rate on the total earnings above the
ER/ET.
EXAMPLE
B. Sampson earns £350 per month from his not
contracted-out job and £450 per month from his contracted-out
job. Total earnings are £800 per month and the earnings period
is monthly.
Employee’s NICs due: £2.10 (Table letter A) +
£37.80 (Table letter D)
Employer’s NICs due: £40.02 (Table letter D)
Employee’s NIC rebate: £0.00
Employer’s NIC rebate: £0.45
Recording the NICs due on form P11
NICs will be recorded on two separate P11s – one for
the not contracted-out NICs and one for the contracted-out NICs.
One form P14 should be completed at the end of the year showing two
separate entries – one for the not contracted-out NICs and
one for the contracted-out NICs under their appropriate
contribution Table letters. The entries on the P11 will be as
follows:-
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 | ||||
| 291 | 38 | 21 | 0 | 2 | 10 | 2 | 10 | ||||
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 | 1h | ||||
| 0 | 0 | 15 | 435 | 77 | 82 | 37 | 80 | 0 | 00 | 0 | 45 |
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 payable | Employee’s contributions payable | ||||
| 1a | 1b | 1c | 1d | 1e | 1f | |||||
| A | 3,492 | 456 | 252 | 0 | 25 | 20 | 25 | 20 | ||
| D | 0 | 0 | 180 | 5,220 | 933 | 84 | 453 | 60 | ||
| 1g/1h | 1i | 1j | ||||||||
| £ | p | £ | p | £ | p | |||||
| NIC rebate due | 5 | 40 | Statutory Sick Pay | Statutory Maternity Pay | ||||||
