Benefits of NIC
-Basic Retirement pension
-Job seekers allowance
-incapacity benefit when SSP not payable
-Employment and support allowance
-Maternity allowance when SMP not payable
-Bereavement benefits
NICs collected through payroll are known as Class 1 NICs
Payable at a predetermined % according to a NI Table letter
NIC is calculated on an individual period basis, not cumulatively
Not all earnings are subject to NIC and everyone gets an NIC free amount of pay
NIC is classed as an insurance not a tax
Paid every period
NI Tables: HMRC publishes 2 tables
CA38 & CA41
What do these 3 NI classes mean:
1, 1A, 1B
1: Payable by ees & ers on ees cash earnings
1A: Payable by ers on benefits provided to ees
1B: Payable by ers on items within PAYE Settlement Agreement
NI Classes: 2, 3, 4
2: flat rate paid by the self employed: abolished 2024
3. Voluntary amount payable if not paying other classes or to fill gaps in contributions
4: profit related contribution payable by self employed
Veteran NI:
- no er in 1st yr of vets civil employment
- based on earnings up to VUST, £50270
-to qualify ee will have completed a minimum of 1 day of basic training in regular armed services
NI holiday for Freeports, from Aprill 2022- Sept 2031
Ni letters F I S L
NI for investment zones, relief from employers secondary NICs, from April 2023
NIC. Table letters N E K D
An employees contributions are referred to as
The Primary contributions
The employers contributions are referred to as
The secondary contributions
NI contributions on BIK are paid…
Annually, by the employer
Primary contributions
- Payable by employees from the age of 16 if Earnings > Primary threshold
-Standard rate- from 16 to SP age
-Reduced rate: Married women with a certificate
-Deferred rate: already paying max NI in another employment
-Additional rate: 2% on earnings above UEL
Class 1A, for…
Benefits in Kind
Class 1A for BIK paid by..
Employers on Taxable benefits, eg: Company cars, private healthcare
What form are Class 1A BIKs reported on and when?
On P11D annually by 6th July following end of tax year.
Class 1B paid by who for what?
Paid by employers for items covered by PAYE settlement agreement.
Class 3 paid by..
Person who is not paying either Class 1 or 2, voluntarily, so entitled to benefits. Set at a fixed weekly rate
What can an employee apply for when they know they will earn above the UEL in any of their multiple employments?
A deferment of payment certificate: CA2700
No employee contributions are due on earnings less than..
£242 p week
True or False, Employees over SPA do not have to pay NI
True
True or false, Womens Reduced rate contributions certificate CA4139 becomes invalid if a women reaches SPA
True
What is the NI class for self employed?
Class 4
