National Insurance

Question 1

Do Class 1 primary & secondary contributions include benefits-in-kind?

Answer 1

Primary: No
Secondary: Yes

Question 2

What is the upper age limit for employee and employer class 1 contributions?

Answer 2

Employee: state pension age
Employer: there is no upper age limit

Question 3

Can class 1 primary & secondary contributions be deducted before tax calculations?

Answer 3

Primary: No
Secondary: Yes

Question 4

What is the advantage of using salary sacrifice?

Answer 4

As C1 NICs are based on salaries, it saves on both primary & secondary contributions.

Question 5

Describe the benefits of the employment allowance.

Answer 5

Employers with a NICs liability of <£100k in previous tax year can get a £5,000 allowance

Question 6

In which scenarios can employers avoid C1 secondary NICs?

Answer 6

Apprentices under 25
Veterans in the first twelve months
Those under 21

Question 7

Why might an individual still choose to pay class 2 NICs, even if their profits don’t exceed the ‘Small Profits Threshold’?

Answer 7

To preserve their state benefits

Question 8

If an employee works for two unrelated companies, how many 0% NI bands can they use?

Answer 8

Two, if the companies were related they would only be able to use one.