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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1: calculating & recording earnings, NICs & NIC rebates: rates, limits, thresholds, rebates and P11 completion: 2000/01 completion of form P11

Column 1a: Earnings at the LEL

Where earnings in the pay period reach or exceed the LEL, the LEL should be inserted here. For example, if the earnings are £100.00, the entry will be £67. If the earnings in the pay period do not reach the LEL, the column should be left blank.

Please note that this column must be completed and reported at the year-end even if the employee earns exactly at the LEL and pays no NICs. Columns 1b and 1c will be left blank. This is to protect the employee’s entitlement to benefit which is still related to earnings at the LEL, and for calculating average weekly earnings for Statutory Sick Pay and Statutory Maternity Pay.

Column 1b: Earnings above the LEL, up to and including the employee’s Earnings Threshold

Where earnings in the pay period reach or exceed the LEL, the figure to be inserted here is the difference between those earnings and the LEL - up to the ceiling of the EMPLOYEE’S Earnings Threshold. For example, if weekly earnings are £73.00, the entry will be £6 (i.e. £73 - £67); if weekly earnings are £80.00, the entry will be £9 (i.e. £76 - £67). If the EMPLOYEE’S earnings are constantly above the employee’s Earnings Threshold, the figure entered will be the same each pay period.

Please note that this column must be completed and reported at the year-end even if the employee earns exactly at or below the EMPLOYEE’S Earnings Threshold and pays no NICs. Again, this is to protect the employee’s entitlement to benefit and for calculating average weekly earnings for Statutory Sick Pay and Statutory Maternity Pay.

Column 1c: Earnings above the employee’s Earnings Threshold, up to and including the employer’s Earnings Threshold

Where earnings in the pay period exceed the EMPLOYEE’S Earnings Threshold, the figure to be inserted here is the difference between those earnings and the EMPLOYEE’S Earnings Threshold - up to the ceiling of the EMPLOYER’S Earnings Threshold. For example, if weekly earnings are £81.00pw, the entry will be £5 (i.e. £81 - £76); if weekly earnings are £100.00, the entry will be £8 (i.e. £84 - £76). If the employee’s earnings are constantly above the EMPLOYER’S Earnings Threshold, the figure entered will be the same each pay period.

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Column 1d: Earnings above the employer’s Earnings Threshold up to and including the Upper Earnings Limit

Where earnings in the pay period exceed the EMPLOYER’S Earnings Threshold, the figure inserted here is the difference between those earnings and the EMPLOYER’S earnings threshold - up to the ceiling of the UEL. For example, if weekly earnings are £82.00 the column will be left blank; if they are £100.00, the entry is £16 (£100 - £84); if they are £540.00pw, the entry will be £451 (£535 - £84). If the employee’s earnings are constantly above, the UEL the figure entered will be the same in each pay period.

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Column 1e: Total of employee’s and employer’s contributions payable

The figure to be inserted here is the combined total of primary (employee’s) and secondary (employer’s) NICs payable. It should be shown in £s and pence.

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Column 1f: Employee’s contributions payable

The figure to be inserted here, in £s and pence, is the employee’s portion included in column 1e.

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Column 1g: NIC rebate due on amount in column 1b

Only those employers who operate a contracted-out occupational pension scheme will use this column. The figure inserted here will be the amount due by way of a NIC rebate on earnings between the LEL and the EMPLOYEE’S Earnings Threshold - even though no primary or secondary contributions are due on those earnings. The employer will subtract the NIC rebate from the overall monthly/quarterly NICs bill when payments are made to the Department.

This rebate is calculated by multiplying the figure in column 1b by the difference in the employee’s not contracted-out and contracted-out percentage rates i.e. 10% - 8.4% = 1.6%

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Column 1h: NIC rebate due on the sum of the amounts in columns 1b and 1c

Again, this column will only be used by those employers who operate a contracted-out occupational pension scheme. The figure inserted here will be the amount of the deduction due by way of a NIC rebate on the earnings between the LEL and the EMPLOYER’S Earnings Threshold - although no secondary contributions are due on those earnings. As with the employee NIC rebate, the employer will subtract the NIC rebate from the overall monthly or quarterly NICs payments made to the Department.

This rebate is calculated by multiplying the figures in columns 1b and 1c by the difference in the employer’s not contracted-out and contracted-out percentage rates. For contracted-out Salary Related Schemes the multiplier will be 12.2% - 9.2% = 3%. For contracted-out Money Purchase Schemes the multiplier will be 12.2.% - 11.6% = 0.6%.