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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Aggregation of Earnings: Calculation and recording: NICs due at contracted-out and not contracted-out rate: Appropriate Personal Pension (APP) in place: Not contracted-out earnings do not reach LEL but total earnings do: 1999 to 2000 tax year

All examples on this page use the 1999 to 2000 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 earnings above the LEL up to and including the UEL. Employer’s contributions are worked out at the:

  • appropriate contracted-out percentage rate on earnings above the ET up to and including the UEL
  • appropriate not contracted-out percentage rate on any earnings above the UEL.

Example

M. Grant earns £50 per week from his not contracted-out job, and £400 per week from his contracted-out job. Total earnings are £450 per week and the earnings period is weekly.

Employee’s NICs due: £32.26 (Table letter D)

Employer’s NICs due: £33.76 (Table letter D)

Employer’s NICs rebate due: £0.51

Recording the NICs due on form P11

NICs will be recorded under contribution Table letter D on one form P11 with the end of year totals, again under contribution Table letter D, on one P14. The entries on the P11 will be as follows:

National Insurance contributions

Earnings up to and including the LEL (where earnings reach 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 Employer’s NICs rebate due on amount in 1b
           
Whole pounds only Whole pounds only Whole pounds only      
1a 1b 1c 1d 1e 1f
£66 £17 £367 £66.02 £32.26 £0.51

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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

NICs Table letter Earnings up to and including the LEL (where earnings reach 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 Employer’s NICs rebate due on amount in 1b
             
  Whole pounds only Whole pounds only Whole pounds only      
  1a 1b 1c 1d 1e 1f
D £3,432 £884 £19,084 £3,433.04 £1,677.52 £26.52