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:
Employer’s contributions are worked out at the:
EXAMPLE
G. Campbell 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 a month and the earnings period is
monthly.
Employee’s NICs due: £52.25 (Table letter D) +
£80.00 (Table letter A)
Employer’s NICs due: £55.36 (Table letter D) +
£95.20 (Table letter A)
Employee’s NIC rebate due: £1.06
Employer’s NIC rebate due: £1.98
Recording the NICs due on form P11
NICs and NIC rebates 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 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 | 66 | 622 | 107 | 61 | 52 | 25 | 1 | 06 | 1 | 98 |
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 | 0 | 800 | 175 | 20 | 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 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 | 792 | 7,464 | 1,291 | 32 | 627 | 00 | |
| A | 0 | 0 | 9,600 | 2,102 | 40 | 960 | 00 | |
| 1f | 1f + 1g | |||||||
| £ | p | £ | p | |||||
| Employee’s NIC rebate to be deducted from contributions in 1e | 12 | 72 | Total of employee’s and employer’s NIC rebate due on 1b | 36 | 48 | |||
