NIC Chapters 25-27

Question 1

What are taxable termination payments >30k subject to?

Answer 1

Class 1a not class 1 primary and secondary

Question 2

Settlement of EE’S personal liabilities?

Answer 2

Subject to class 1 prim and sec BUT NOT PAYE (pecuniary liabilities)

Question 3

Are vouchers earnings?

Answer 3

Yes

Question 4

Are mileage payments earnings?

Answer 4

Yes

Question 5

What is the current pension age?

Answer 5

66 (ER NI STILL MUST BE PAID!!)

Question 6

What do directors have?

Answer 6

An annual earnings period

Question 7

ER NI for EE’S under the age of 21 and apprentices under the age of 25?

Answer 7

NIC contributions are 0% between secondary threshold and the upper secondary threshold

Question 8

Armed forces veteran?

Answer 8

EE under 21/apprentices rules also apply for 12 month period starting with first day in civilian job.

Question 9

Freeport tax site?

Answer 9

ER NI charged at 0% up to an including freeport upper secondary threshold (see tax tables!!). For the first 3 yrs of employment only.

Question 10

Freeport tax site rules?

Answer 10

New EE starting after 6 april 2022, spends at least 60% of their time working at the freeport site. Cannot have worked for their ER or a connected ER for 2 years prior.

Question 11

Who is the annual maxima contribution for?

Answer 11

EE’S with two jobs

Question 12

how to find the annual maxima calc in the leg?

Answer 12

Go to book 3 and type in annual maxima

Question 13

What can a taxpayer apply for if they know they will exceed the annual amount?

Answer 13

A deferment (if they know they will be due a refund). But they will continue to pay class 1 nic’s at 3.25% on earnings in excess of prim threshold.

Question 14

How many weeks was the PT threshold lower for?

Answer 14

13 weeks!

Question 15

why do directors have an annual earning period?

Answer 15

to prevent them from manipulating their earnings for NIC purposes

Question 16

if the director chooses to have in monthly?

Answer 16

at the end of the year this will have to be compared to what it wouldve been if annual- so would still end up paying annually

Question 17

if director is appointed or resigns during the tax year?

Answer 17

if appointed they will have a pro rate annual earnings period, if resign it will not be pro rate

Question 18

when may a director be liable to a companys unpaid NICs?

Answer 18

if due to fraud or negligence

Question 19

is a director bonus taxable if held on account within the company (but available to the director)?

Answer 19

yes

Question 20

if a directors account becomes overdrawn due to a withdrawal made in anticipation of earnings?

Answer 20

class 1 NICs are due on the overdrawn amount

Question 21

if an ER enters into a contract with a third party…

Answer 21

Benefit subject to class 1a NIC

Question 22

if a benefit is provided partly for personal and partly for business reasons…

Answer 22

the full amount is subject to class 1a even if the EE can claim a deduction for the business bit for tax

Question 23

Calc to get to to tax bit of a PSA?

Answer 23

tax rate/(100-tax rate)

Question 24

What are the 3 possible things a benefit can be to be put on a PSA?

Answer 24

Minor, irregular, impractical

Question 25

If incidental expenses are greater than the limits?

Answer 25

FULLY taxable-not just the amount in excess!

Question 26

when does the 24 month rule not need to be considered?

Answer 26

When there is not a period of ‘continuous work’ i.e when ee does not work somewhere more than 40% of the time.

Question 27

learnings from lucas v cattell?

Answer 27

HMRC will not except that any part of line rental costs are allowable business expenses