National Insurance Flashcards
What factors determine NIC
Employment status
Age
Level of earnings
Residence
Who pays class 1 NIC
Enployee and employee
Who pays class 2 NIC
Self employed (flat rate)
Who pays class 3 niC
Voluntary (flat rate)
Who pays class 4 NIC
Self employed (percentage rate)
Are NIC paid on shares acquired under approved share schemes
No
Are NIC.paid on shares that can be converted to cash under unapproved schemes
Yes
Are NIC calculated before or after tax for an employee
Before
Can Employer NIC be deducted from profits for tax purposes
Yes
What age are NIC payable until for employees
State retirement age
What are NIC based on
Pay periods not year
What is the primary contribution threshold
£166 per week employees pay class 1 NIC above this level
What is the secondary contribution level
£166 per week employers pay class 1 above this level
What is the lower earnings limit
£118 per week this is the minimum level of earnings for an employee to be entitled to social security benefits
What is the upper earnings limit
£962 per week. Max level of earnings that an employee will pay NOC at the main rate
What is the upper secondary threshold for under 21s/ apprentice upper secondary threshold
£963 per week this is the upper limit for 0% employers rate for under 21 and apprentices under 25
What is the employer rate of NIC
13.8%
What is the main rate of NIC for employees
12%
What is the additional primary percentage rate
2%
What is the employer allowance
£3000 per year
Deducted from total secondary contributions
What is the married women reduced rate
Before April 1977 married women could elect to pay a reduced rate of 5.85% on their earnings between £166 and £962
When is married women’s reduction revoked
Divorce, remarriage, earning less than LEL for 2 consecutive tax years and no self employed earnings
Are class 1A nIC charged on fringe benefits for employee
No
What is the rate of employer class 1 NiC due on fringe benefits
13.8%
How long will NICO collect NIC for if employee relocated abroad but the employer is UK based
52 weeks
What pay period is used to calculate company directors NIC
Annual earnings period used if paid irregular amounts at irregular intervals.
When earnings are paid the total earnings since start of tax year must be considered
What are the special categories of employment
Domestic workers, agency workers and lecturers
What are the rules for special categories of employment
They may not be employed but will be treated as employee for NIC purposes
In what circumstances will the nIc record be credited as if contributions have been paid
Unemployed claiming certain benefits
On approved training course
Income below pct but above lel
Whilst entitled to certain types of statutory pay
When can an employee defer paying class 1 NIC
If any of the following apply
The employee pays class 1 NoC with more than 1 employer
The employee earns more than £962 per week from one job over the tax year
The employee earns more than £1128 per week from 2 jobs over the tax year
A reduced rate of 2% will apply to the standard rate instead of normal 12%
Can NIC be repaid in event of overpayment
No automatic right
What is the limit of earnings for a self employed person to be able to choose not to pay class 2 NIC
£6365
What rate of NiC gives entitlement to contributory state benefits
Class 2
What is the flat rate for class 2 Nic
£3 per week
What is the main rate for class 4 Nic
9% on earnings between £8632 and £50,000
What is the additional rate of class 4 NIC
2% on self employed earnings over £50k
How are class 2 contributions collected
Included I. Self assessment collected on 31st Jan after end of tax year
How are class 4 contributions collected
Included in self assessment - w payments on account and a balancing payment
What is the maximum amount of contributions for class 1 & 2
£4964.16
What is the maximum amount of contributions for 2& 4
£3879.12
How long after the tax year to which they relate can class 3 contributions be paid
6 years
