All examples on this page use the 2001/2002 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 not contracted-out earnings above
the ET 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
J. Robertson earns £350 per month from his
contracted-out job, and £400 per month from his not
contracted-out job. Total earnings are £750 per month and the
earnings period is monthly.
Employee’s NICs due: £37.20 (Table letter A)
Employer’s NICs due: £44.27 (Table letter A)
Employee’s NIC rebate due: £0.00
Employer’s NIC rebate due: £1.75
Recording the NICs due on form P11
NICs and NIC rebates will be recorded on two separate P11s
– one for the contracted-out NIC rebates 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 NIC rebates 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 NIC rebates
| National Insurance contributions Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit | ||||||||||
| Earnings details | Contribution details | Rebate details | ||||||||
| Earnings at the LEL (where earnings are equal to 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 on earnings in
column 1c (before deducting employee’s NIC rebate in 1f)
| Employee’s NIC rebate due on earnings in 1b (to be deducted from contributions in 1e) | Employer’s NIC rebate due on earnings in 1b and any balance of employee’s NIC rebate due but not shown in 1f | ||||
| 1a | 1b | 1c | 1d | 1e | 1f | 1g | ||||
| 312 | 38 | 0 | 0 | 00 | 0 | 00 | 0 | 00 | 1 | 75 |
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 are equal to 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 on earnings in column 1c
(before deducting employee’s NIC rebate in 1f)
| Employee’s NIC rebate due on earnings in 1b (to be deducted from contributions in 1e) | Employer’s NIC rebate due on earnings in 1b and any balance of employee’s NIC rebate due but not shown in 1f | ||||
| 1a | 1b | 1c | 1d | 1e | 1f | 1g | ||||
| 0 | 28 | 372 | 81 | 47 | 37 | 20 | ||||
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 including the Earnings Threshold
(whole £s only) | Earnings above the
Earnings Threshold, up to and including the UEL
(whole £s only) | Total of employee’s and employer’s contributions payable | Employee’s contributions payable on earnings in 1c (before deducting employee’s NIC rebate in box 1f) | |||
|
| 1a | 1b | 1c | 1d | 1e | |||
| D | 3,744 | 456 | 0 | 0 | 00 | 0 | 00 | |
| A | 0 | 336 | 4,464 | 977 | 64 | 446 | 40 | |
| 1f | 1f + 1g | |||||||
| £ | p | £ | p | |||||
| Employee’s NIC rebate to be deducted from contributions in 1e | 0 | 00 | Total of employee’s and employer’s NIC rebate due on 1b | 21 | 00 | |||
