Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
, see all updates

Aggregation of Earnings: Calculation and recording: NICs due at contracted-out and not contracted-out rate: No Appropriate Personal Pension (APP) in place: Total earnings reach or exceed ET but do not reach UEL: 2001 to 2002 tax year

All examples on this page use the 2001 to 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
  • appropriate not contracted-out percentage rate on not contracted-out earnings until the total earnings reach the UEL.

Employer’s contributions are worked out at the:

  • appropriate contracted-out percentage rate on earnings above the ET
  • appropriate not contracted-out percentage rate on not contracted-out earnings.

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 NICs rebate due: £1.06

Employer’s NICs rebate due: £1.98

Recording the NICs due on form P11

NICs and NICs 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 reach or exceed the LEL) Earnings above the LEL, up to and including the employee’s 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 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

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 Earnings Threshold, up to and including the UEL Total of employee’s and employer’s contributions payable Employee’s contributions payable on earnings in 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    

Top of page

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 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 1c (before deducting employee’s NIC rebate in 1f)
           
  Whole pounds only Whole pounds only Whole pounds only    
  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  
  Employee’s NICs rebate to be deducted from contributions in 1e £12.72 Total of employee’s and employer’s NICs rebate due on 1b £36.48