National Insurance Contributions Flashcards
When can you charge a penalty?
A penalty may be charged on the late payment of balancing payments under self-assessment (but not payments on account)
What penalties should you charge?
Penalties can be found in the ‘Individuals: penalties’ table. They depend on the length of the delay in payment and the amount of unpaid tax.
What do you pay Class 1 Primary and Class 1 Secondary national insurance contributions on?
Cash earnings (before deductions) plus vouchers exchangeable for cash, goods or services
When are class 1 national insurance contributions due?
- Payable under PAYE by 19th of each month
- Deadline extended to 22nd of the month for electronic payment
- Employers with 250 or more employees must pay electronically. Other employers can choose to pay electronically
- Can pay quarterly if average monthly total PAYE (income tax and NICs) are less than or equal to £1,500
How do you calculate the employee’s weekly/monthly NIC liabilities?
Take their weekly/monthly salary and deduct the lower earnings threshold. Then times this by the percentage
How do you calculate the employer’s weekly/monthly NIC liabilities?
Take the employee’s earnings, deduct the secondary threshold, and multiply this by the relevant percentage
What happens if in one week/month an employee receives an additional payment, e.g. a bonus?
It is necessary to calculate NICs weekly/monthly
Class 1 primary relates to what?
The employee’s NIC’s
Class 1 secondary relates to what?
The employer’s NIC’s
Is it acceptable to use the annual limits when calculating the total class 1 secondary NIC payable for the tax year in relation to a particular employee?
It IS acceptable to use the annual limits when calculating the total class 1 secondary NIC payable for the tax year, whether or not an employee is paid evenly throughout the year
Who is the employment allowance unavailable to?
The employment allowance is not available to companies with a single director and no other employees
It is also unavailable if the Class 1 secondary NIC liability was more than or equal to £100,000 in the previous year
When should you include the employment allowance?
You should include the employment allowance in calculations of Class 1 secondary NIC unless you are told otherwise
When is Class 1A NIC due?
Class 1A NIC is paid annually by 19th July (22nd July if paid electronically) following the end of the tax year
What is the employment allowance set against?
The employment allowance can only be set against the employer’s class 1 secondary NIC liability. It is not available against the employee’s class 1 primary NICs, nor against the employer’s class 1A liability on taxable benefits.
The maximum allowance will be the lower of:
(i) the total class 1 secondary liability for the business in the tax year
(ii) £4,000.
