Chapter 14 - National Insurance Contributions

Question 1

What are Class 1B Contributions?

Answer 1

Employers liable to pay these on the grossed up value of earnings in a PAYE Settlement Agreement at the rate of 13.8%.

Question 2

What is a PAYE Settlement Agreement?

Answer 2

Between employer and HMRC where the employer pays the income tax on employee benefits (rather than subjecting the employees to IT on those benefits).

Question 3

How do you calculate the value of the NIC to charge tax to?

Answer 3

You must gross up the value of the benefit by:

100 / (100-employee’s % marginal rate of IT)

Question 4

When is Class 1B contributions due?

Answer 4

By 19 October in the tax year following the one which the PAYE Settlement Agreement relates to.