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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 forms P11 (2003-04) & P14 (2003-04) example 11 - contracted-out salary related (COSR) scheme -

  • Lower Earnings Limit (LEL): £77.00
  • Earnings (ET): £89.00
  • Upper Earnings Limit (UEL): £595.00

Weekly earnings of £650.00

£595.00 - £89.00 = £506.00      
         
Employee’s NICs due up to UEL = £506.00 x 9.4% = £47.564, rounded to £47.56  
£89.00 - £77.00 = £12.00      
Employee’s NIC rebate due = £12.00 x 1.6% = £0.192, rounded to 0.19  
Net employee’s NICs due up to UEL = £47.56 - £0.19 = £47.37  
£650.00 - £595.00 = £55.00      
         
Employee’s NICs due on earnings above UEL = £55.00 x 1% = £0.55  
Total employee’s NICs due = £47.37 + £0.55 = £47.92  
Employer’s NICs due up to UEL = £506.00 x 9.3% = £47.058, rounded to 47.06  
Employer’s NIC rebate due = £12.00 x 3.5% = £0.42  
Net employer’s NICs due up to UEL = £47.06 - £0.42 = £46.64  
Employer’s NICs due on earnings above UEL = £55.00 x 12.8% = £7.04  
Total employer’s NICs due = £46.64 + £7.04 = £53.68  

Complete P11 as follows -

1a 1b 1c 1d 1e  
           
£77 £12 £506 £101.60 £47.92  
           

Assuming earnings are the same for 52 weeks, complete P14 as follows -

1a 1b 1c 1d 1e  
           
£4004 £624 £26,312 £5,283.20 £2,491.84