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HMRC internal manual

National Insurance Manual

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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 reach or exceed UEL: 2000 to 2001 tax year

All examples on this page use the 2000 to 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 appropriate not contracted-out percentage rate on not contracted-out earnings above the EE/ET up to and including the UEL. Employer’s NICs are worked out at the appropriate not contracted-out percentage rate on the total earnings above the ER/ET.

Example

K. Roberts earns £560 per week from his not contracted-out job and £80 per week from his contracted-out job. Total earnings are £640 per week and the earnings period is weekly.

Employee’s NICs due: £45.90 (Table letter A)

Employer’s NICs due: £67.83 (Table letter A)

Recording the NICs due on form P11

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

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 NICs rebate due on amount in column 1b NICs rebate due on the sum of the amounts in columns 1b and 1c
1a 1b 1c 1d 1e 1f 1g 1h
£67 £9 £8 £451 £113.73 £45.90    

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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

Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit.

NICs Table letter Earnings at the LEL (where earnings reach or exceed the LEL) Earnings above the LEL, up to and incl. The employee’s Earnings Threshold Earnings above the employee’s Earnings Threshold, up to and incl. The employer’s Earnings Threshold Earnings above the employer’s Earnings Threshold, up to and incl. The UEL Total of employee’s and employer’s contributions Employee’s contributions payable
             
  Whole pounds only Whole pounds only Whole pounds only Whole pounds only    
  1a 1b 1c 1d 1e 1f
A £3,484 £68 £416 £23,452 £5,913.96 £2,386.80
    1g/1h   1i   1j
  NICs rebate due   Statutory Sick Pay   Statutory Maternity Pay