NICs

Question 1

What counts as earned income for NICs

What about employee benefits

Contributions based on

Employees under 21, Apprentices under 25

Answer 1

Earned income - salary , OT, commission, holiday pay & bonuses, Statutory pay (sick., maternity), some lump sums, where employee pays for personal liabilities (school fees)

• Employee benefits not included fro employee (but employer pays them)
• Conts based on gross income 16 - SPA (only employer contributes after SPA
• Employees under 21 & Apprentices under 25 - Employer pays 0% up to UST and AUST

Question 2

What is the Employment allowance

Who applies to

Limit

Answer 2

• £3,000 employment allowance can be deducted from employer NI bill
• Available to businesses, charities and individuals who employ others
• Allowance only available to smaller companies, ie those with employer NIC bill below £100,000 in previous tax year (from April 20)

Question 3

NI credits - Who can be awarded

Answer 3

• Over 18 on government approved trading scheme
• unemployed
• unable to work due to illness
• statutory maternity, paternity, adoption or shared parental leave
  Claiming child benefit for child under 12
• Would need to make class 3 contributions to make up

Question 4

How are taxable employee benefits charges to NI

• Class 1 - how paid

Answer 4

• Employer pays 13.8% 1a contributions @ 13.8% eg car benefit of £5,000 -NI 13.8% x £5,000. Due 22 July after end of tax year (19th if not paid electronically)
• Class 1 paid PAYE (both) under HMRC real time reporting

Question 5

Multiple employments

• Where combined income is more than UEL of £50,000

Answer 5

1. • Pay 12% on one employ and 2% on the other
2. Salary 1 minus Primary threshold( 8,632) + Salary 2 minus PT minus £41,368 (50,000 - £8632)

Difference charged at 2%

Total would be 1 + 2

Question 6

What is class 2 NI

Answer 6

• Flat rate payable weekly @ £3pw
• payable between 16 to SPA
• Due 31st January after tax year via self assessment
• Build up entitlement to state benefits.
• No credits given if profits below threshold of £6365
• Individual can pay voluntary class 2

Question 7

What is class 4

Answer 7

• payable between 16 & SPA
• Earnings related
• Does not build up entitlement to state benefits
• payable via self assessment -2 payments on account - one on 31st Jan before do tax year, one 31 July + balancing payment.
  PAyment on account half of previous tax year