Nics Flashcards
What are nics and what factors determine them
Compulsory contributions to state social security system
Factors that determine level and type are Employment status Age Level of earnings Residence status
Who collects nics and when do they start
Hmrc collect and starting age is 16
How many nic classes are there and what are their names
4 in total Class 1 employee and employer percentage rates Class 2 self employed Class 3 voluntary Class 4 self employed percentage rates
What indicates that someone is employed
Contract of service
How and when work is done
Work done is integral to part of the business
Nic contributions are taken from which kinds of earnings
Bonus, overtime, hol pay
Incentive pay to accept change to terms of employment
Mat, pat,shared parental,adoption and sick pay
Lump sum for joining or leaving
Payments for personal debt
Payments that can be converted to cash
Are nics taken from shares
Yes if they can be converted to cash quick
However can leave some startup companies in trouble so employees can tax liability and can get tax relief on gain
At what age does an employee start to pay nics
From 16 to spa after that they don’t pay but the employer has to still pay their part
Name the thresholds that affect class 1 nics for employee and employer
Primary threshold is what the employee pays for class 1 nics. It starts at 162 a week
Secondary threshold is paid by the employer and this starts at 162 a week for employees above 21 and apprentice age above 25
What is lower earning limit
Min level of earning that an employee loan have to contribute to state pension the amount is 116 per week
What is upper earning limit
Max level of earnings an employee can make at the main rate.
amount is 892 per week
What is upper secondary threshold and apprentice upper secondary threshold and what are their rates
Ust is for employees under 21
Aunt is for apprentice under 25
Both of them is at 892 a week
Who uses the annual contribution rate
Only company directors
How much is employee rate for class 1 nics
Rate is 12% and 2% above uel
What is the employer rate
First 162 is free
After this it’s at 13.8%
892 for under 21 and under 25 if apprentice then 13.8%
Explain employer alllowance
Entitled to 3000 a year ducted
from total secondary contribution
employee primary contribution are not affected by this
Only one deduction allowed where employers are connected and where one company controls another
Explain what Married woman reduced rate is
If married before 6 April 1977 they would get a reduced rate this applied to widowed as well
Election no longer effective in the following divorce or annulment
remarriage
2 complete consecutive years with no earnings above LEL
Rate is 5.85% between lel and uel
Who and how are nicks collected
What does the employer have to do as well
Hmrc get them
Collected via paye system
Employer is responsible
Class 1A are due on 22nd July after the end of the tax year but 19 July if done electronically
Benefits liable to class 1A have to be put on a P11D form
What are the penalties for late payment
No late payment for first one in tax year unless six months late
Then at 1% of the late amount
5% charge on late payment that is six months late further 5% if 12 months late
Up to 3 penalties of 5% maybe charge my class 1A is late and initial Payment with full payment is not made within 30 days of the date of second with six months late and the third where 12 months late
What are the EE a regulations
A person that is era national only pays in one state
Usually the country working in
Hey foreign employer can’t pay nics if obliged to pay similar in their own EEa state
How does hmrc collect nics for someone coming in the UK
Will attempt to collect nics for people that work on a regular basis and if unclear then after 52 weeks
How will hmrc collect nics from someone leaving the uk
If someone going to work abroad and their employer or company still in uk. Hmrc will collect nics for 52 weeks
If director is a shareholder how can he reduce nics
They can do so via paying a salary through dividends as this saves payment of nics
What special category is treated as employee nic payment but not income tax
Domestic workers
Agency workers
Lecturer or instructor
Labour only subcontractors
When can someone be credited for nic payments
During periods of Full time training Unemployment or sickness Stat mat,pat,shared parent,adoption pay When inc below primary but above or at lel
