NIC Flashcards
Identify who pays the following types of NIC and what they are based on
a) Class 1 primary
b) Class 1 secondary
c) Class 1A
d) Class 1B
e) Class 2
f) Class 4
a) Paid by employees on their cash earnings and vouchers
b) Paid by employers on employee’s cash earnings and vouchers
c) Paid by employers on non cash benefits
d) Paid by employees on the grossed up value of benefit ( benefit + Income tax)
e) Paid by self employed. Flat rate of £3.15/ week
f) Paid by self employed on taxable profits
To whom is the employment allowance not available?
Firms where only one director is payrolled
Firms where class 1 secondary in PY > £100,000
How do you calculate the effective rate of tax?
Total tax liability / total income. Express as a % to 1dp
How does net disposable income differ from taxable income
Net disposable income is calculated on the cash basis and only includes what the employee actually paid (i.e. does not take into account non cash benefits)
Taxable income does take into account non cash benefits & Personal allowance
When does the interest period run from and to if a payment on account is made late?
The day after payment should have been made to the day before payment is made
What are the POA dates and balancing payment dates?
What liabilities are payable on these dates?
POA 1 : 31 Jan within tax year
POA 2 : 31 July after tax year
Balancing payment : 31 Jan after tax year
Income tax & Class 4 NIC are payable on these dates.
Class 2 & CGT are payable 31 Jan after tax year
How are POAs calculated?
(PY income tax & NIC class 4)/2
What are the exemption thresholds for making POAs?
If the amount of tax payable by self assessment (i.e. not employment income tax) was < £1000
OR
80% tax is deducted at source
