NICs Flashcards
1
Q
What counts as earned income for NICs
What about employee benefits
Contributions based on
Employees under 21, Apprentices under 25
A
Earned income - salary , OT, commission, holiday pay & bonuses, Statutory pay (sick., maternity), some lump sums, where employee pays for personal liabilities (school fees)
- Employee benefits not included fro employee (but employer pays them)
- Conts based on gross income 16 - SPA (only employer contributes after SPA
- Employees under 21 & Apprentices under 25 - Employer pays 0% up to UST and AUST
2
Q
What is the Employment allowance
Who applies to
Limit
A
- £3,000 employment allowance can be deducted from employer NI bill
- Available to businesses, charities and individuals who employ others
- Allowance only available to smaller companies, ie those with employer NIC bill below £100,000 in previous tax year (from April 20)
3
Q
NI credits - Who can be awarded
A
- Over 18 on government approved trading scheme
- unemployed
- unable to work due to illness
- statutory maternity, paternity, adoption or shared parental leave
Claiming child benefit for child under 12 - Would need to make class 3 contributions to make up
4
Q
How are taxable employee benefits charges to NI
- Class 1 - how paid
A
- Employer pays 13.8% 1a contributions @ 13.8% eg car benefit of £5,000 -NI 13.8% x £5,000. Due 22 July after end of tax year (19th if not paid electronically)
- Class 1 paid PAYE (both) under HMRC real time reporting
5
Q
Multiple employments
- Where combined income is more than UEL of £50,000
A
- Pay 12% on one employ and 2% on the other
- Salary 1 minus Primary threshold( 8,632) + Salary 2 minus PT minus £41,368 (50,000 - £8632)
Difference charged at 2%
Total would be 1 + 2
6
Q
What is class 2 NI
A
- Flat rate payable weekly @ £3pw
- payable between 16 to SPA
- Due 31st January after tax year via self assessment
- Build up entitlement to state benefits.
- No credits given if profits below threshold of £6365
- Individual can pay voluntary class 2
7
Q
What is class 4
A
- payable between 16 & SPA
- Earnings related
- Does not build up entitlement to state benefits
- payable via self assessment -2 payments on account - one on 31st Jan before do tax year, one 31 July + balancing payment.
PAyment on account half of previous tax year