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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: 2003/04 completion of form P11(2003-04) - earnings details

Where earnings in the earnings period reach or exceed the LEL (see NIM01005), the LEL should be inserted here. For example, if the earnings are £100.00, the entry will be £77.00. If the earnings in the earnings period do not reach the LEL, the column should be left blank.

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 to 1e will be left blank. This information will protect the employee’s entitlement to benefit, which is related to earnings at the LEL, and for calculating average weekly earnings for SSP, SMP, SPP and SAP.

Column 1b: Earnings above the LEL, up to and including the Earnings Threshold (ET)

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 ET (see NIM01008). For example, if weekly earnings are £85.00, the entry will be £8 (£85 - £77); if weekly earnings are £100, the entry will be £12 (£89 - £77). If the employee’s earnings are constantly above the ET, the figure entered will be the same each pay period, for example £12.

This column must be completed and the total reported at the year-end, even if the employee earned exactly at or below the ET and paid no NICs. This is to protect the employee’s entitlement to benefit and for calculating average weekly earnings for SSP, SMP, SPP and SAP. This information is also needed to calculate the correct amount of employee’s and employer’s NIC rebates.

If the NI Tables are used, the amount to be entered should be in whole £s. If the exact percentage method is used, the entry will be in £s and pence.

Column 1c: Earnings above the ET, up to and including the Upper Earnings Limit (UEL) 

Where earnings in the period exceed the ET, the figure inserted here is the difference between those earnings and the ET - up to the ceiling of the UEL. For example:

  • if weekly earnings are £89, the column will be blank
  • if they are £100, the entry will be £11 (£100 - £89); and
  • if the employee’s earnings are constantly above the UEL, the figure entered should be the same in each pay period, for example £506 (£595 - £89).

If the NI Tables are used, the amount entered should be in whole £s - see NIM11003. If the exact percentage method is used, the entry will be in £s and pence - see NIM11002.

Note that the introduction of the 1% employee’s NICs on earnings above the UEL does not affect the recording and reporting of the earnings. In other words, there is no requirement to record and report separately details of those earnings above the UEL attracting the additional 1% liability.