Module 8 NIC

Question 1

What are the classes of NIC?

Answer 1

1) Class 1
a) Primary contributions, paid by
employees
b) Secondary, Class 1A (employee
benefits) and 1B (employer settles tax
on behalf of employee)
contributions paid by employers

2) Class 2: Paid by self-employed

3) Class 3: Voluntary

4) Class 4: Paid by the self-employed

Question 2

When are class 1 primary NICs due to be paid in the month?

Answer 2

Payments must be made by 19 or 22 of each tax month depending on whether payments are made manually or electronically

Question 3

What time period is used for working out Directors NIC?

Answer 3

Directors are always deemed to be on an Annual Earnings period for NICs and therefore annual limits are used for calculations.

Question 4

Why are annual limits applied to directors?

Answer 4

To avoid them artificially reducing NIC liabilities by manipulating the timing of the payment of their earnings