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
contracted-out percentage rate on contracted-out earnings above the
ET up to and including the UEL. Employer’s contributions are
worked out at the:-
EXAMPLE
T. Johnston earns £340 per month from his not
contracted-out job, and £400 per month from his contracted-out
job. Total earnings are £740 per month and the earnings period
is monthly.
Employee’s NICs due: £30.41 (Table letter D)
Employer’s NICs due: £32.22 (Table letter D)
Employee’s NIC rebate due: £0.61
Employer’s NIC rebate due: £1.14
Recording the NICs due on form P11
NICs and NIC rebates will be recorded on two separate P11s
– one for the not contracted-out earnings and one for the
contracted-out NICs and NIC rebates. One form P14 should be
completed at the end of the year showing two separate entries
– one for the not contracted- out earnings details and one
for the contracted-out NICs and NIC rebates under their appropriate
contribution Table letters. The entries on the P11 will be as
follows:-
For not contracted-out earnings
| 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 | 28 | 0 | 0 | 00 | 0 | 00 | 0 | 00 | 0 | 00 |
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 | ||||
| 0 | 38 | 362 | 62 | 63 | 30 | 41 | 0 | 61 | 1 | 14 |
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 | |||
| A | 3,744 | 336 | 0 | 0 | 00 | 0 | 00 | |
| D | 0 | 456 | 4,344 | 751 | 56 | 364 | 92 | |
| 1f | 1f + 1g | |||||||
| £ | p | £ | p | |||||
| Employee’s NIC rebate to be deducted from contributions in 1e | 7 | 32 | Total of employee’s and employer’s NIC rebate due on 1b | 21 | 00 | |||
