Chapter 2 - National Insurance Flashcards
How many classes of National Insurance are there and who pays which?
4
- Class 1 – for employers and employee
- Class 2 – for self employed (flat rate)
- Class 3 – voluntary
- Class 4 – for self employed (% earnings)
Over what amount do employees start paying national insurance?
£157 per week
On what level of earnings do employees pay 12% national insurance?
£157 - £866 per week
What rate of national insurance do employees pay on earnings over £866 per week?
2%
From what ages are class 1 employee NICs paid?
16 - state pension age
Over what amount do employees start paying national insurance?
£157 per week
On what level of earnings do employees pay 13.8% national insurance?
£866 per week and above, there is no upper limit on this
How do employer national insurance contributions differ for apprentices and employees under the age of 21
Everything up to £866 (UST/AUST) is at 0%
If class 1 NICs are not paid who is held accountable
It is the employers responsibility
Under what circumstances must earnings be aggregated across multiple employments?
When there is a link between the employers
What are class 2 NICs and who pays them?
Self employed people will pay NIC on both a flat rate and on their profits. Class 2 is a flat rate that is paid if profits are over £6,025. The rate paid is £2.85 per week
What are class 4 NICs and who pays them?
Self employed people will pay NIC on profits generated between £8,164 - £45,000 at 9% and 2% on profits above this level. Paid via self assessment
For self employed people which class of NIC accrue entitlement to state benefits?
Class 2
What are class 3 NICs and who pays them?
Voluntary contributions made by individuals with gaps in their NIC record. £14.25 per week.
Mr Dixon has earnings of £900 per week. What is his weekly NIC?
£85.76
£0 – £157 = £0
£157 – £866 = £709 x 12% = £85.08
£866 + = £34 x 2% = £0.68
£85.08 + £0.68 = £85.76
