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HMRC internal manual

# Class 1: calculating & recording earnings, NICs & NIC rebates: rates, limits, thresholds, rebates and P11 completion: 2001/02 completion of form P11, examples - contracted-out salary related (COSR) scheme

• Lower Earnings Limit (LEL): £72.00
• Primary Threshold (PT) & Secondary Threshold (ST) - the ‘ET’: £87.00

Upper Earnings Limit (UEL): £575.00

## Weekly earnings of £84.00

 Employee’s NICs due = NIL Employer’s NICs due = NIL £84.00 - £72.00 = £12.00 Employee’s NIC rebate due = £12.00 x 1.6% = £0.19 Employer’s NIC rebate due = £12.00 x 3% = £0.36 Total NIC rebate due = £0.19 + £0.36 = £0.55

Note: As the employee’s NICs are nil, the employer can claim the full balance of the employee’s NIC rebate in addition to the employer’s NIC rebate due. The entry in column 1f will be nil. The entry in column 1g will be £0.55 (£0.19 + £0.36).

Complete P11 as follows -

 1a 1b 1c 1d 1e 1f 1g £72 £12 £0.55

## Weekly earnings of £89.00

 £89.00 - £87.00 = £2.00 Employee’s NICs due = £2.00 x 8.4% = £0.17 Employer’s NICs due = £2.00 x 8.9% = £0.18 Total NICs due = £0.17 + £0.18 = £0.35 £87.00 - £72.00 = £15.00 Employee’s NIC rebate due = £15.00 x 1.6% = £0.24 Employer’s NIC rebate due = £15.00 x 3% = £0.45 Total NIC rebate due = £0.24 + £0.45 = £0.69

Note: Although the employee’s NIC rebate is £0.24, the employee’s NICs due are only £0.17. As the employee can only claim back the amount of NIC rebate up to the value of the employee’s NICs paid, the entry in column 1f will be £0.17. The balance of the employee’s NIC rebate, £0.07, is added to the employer’s NIC rebate of £0.45, and the entry in column 1g will be £0.52.

Complete P11 as follows -

 1a 1b 1c 1d 1e 1f 1g £72 £15 £2 £0.35 £0.17 £0.17 £0.52

## Weekly earnings of £100.00

 £100.00 - £87.00 = £13.00 Employee’s NICs due = £13.00 x 8.4% = £1.09 Employer’s NICs due = £13.00 x 8.9% = £1.16 Total NICs due = £1.09 + £1.16 = £2.25 £87.00 - £72.00 = £15.00 Employee’s NIC rebate due = £15.00 x 1.6% = £0.24 Employer’s NIC rebate due = £15.00 x 3% = £0.45 Total NIC rebate due = £0.24 + £0.45 = £0.69

Note: In this example, because the employee has paid enough NICs to cover the whole of the employee’s NIC rebate calculated, the employee can claim the full amount of the rebate due. The entry in column 1f will therefore be £0.24. The entry in column 1g will be £0.45.

Complete P11 as follows -

 1a 1b 1c 1d 1e 1f 1g £72 £15 £2 £2.25 £1.09 £0.24 £0.45