Topic 3 - NICs and the administration of personal tax Flashcards
What are the four main classes of National Insurance Contributions (NICs)?
Class 1 Primary (employee), Class 1 Secondary (employer), Class 1A, Class 4
How is Class 1 Primary NIC collected?
Via PAYE (Pay As You Earn)
What is the percentage rate for Class 1 Primary NIC above the Upper Earnings Limit (UEL)? IN TAX TABLES
2%
What is the Primary Threshold (PT) for Class 1 NIC? IN TAX TABLES
£12,570
What is the Upper Earnings Limit (UEL) for Class 1 NIC? IN TAX TABLES
£50,270
At what earnings level does an employer start paying Class 1 Secondary NIC? IN TAX TABLES
£9,100
What is the percentage rate for Class 1 Secondary NIC? IN TAX TABLES
13.8%
Which class of NIC is payable on benefits in kind?
Class 1A
When is Class 1A NIC payable? NOT IN TAX TABLES
22 July
Which NIC class applies to self-employed individuals?
Class 4
What is the percentage rate for Class 4 NIC above the Upper Profits Limit (UPL)? IN TAX TABLES
2%
What are the Lower Profits Limit (LPL) and Upper Profits Limit (UPL) for Class 4 NIC? IN TAX TABLES
LPL: £12,570, UPL: £50,270
How is Class 4 NIC collected?
Via self-assessment
Which of the following NICs is collected via PAYE?
A) Class 1
B) Class 1A
C) Class 4
D) None of the above
A) Class 1
Which of the following NICs is paid via self-assessment?
A) Class 1
B) Class 1A
C) Class 4
D) None of the above
C) Class 4
Who is liable to pay Primary Class 1 NIC?
Employees, from their 16th birthday until state pension age (assumed to be 66 for the exam)
What types of earnings are included in the calculation of Class 1 NIC?
Earnings received as money, including salary, bonus, and tips, but excluding benefits (except vouchers)
Which of the following earnings are subject to Class 1 NIC?
A) Salary
B) Bonus
C) Tips
D) Vouchers
A) Salary, B) Bonus, C) Tips
If an employee receives a fixed salary each month, how should annual NIC contributions be calculated?
Use annualised limits from tax tables to find total contributions
If an employee receives variable earnings (e.g., a bonus in one month), how should NIC contributions be calculated?
Calculate contributions for each period (weekly/monthly) separately and sum them up, rounding at each stage
Who is liable to pay Class 1 Secondary NICs?
Employers
At what age do employees start being subject to Class 1 Secondary NICs?
From their 16th birthday, with no upper age limit
Are there any exemptions from Class 1 Secondary NICs for younger employees?
Yes, employees under 21 and apprentices under 25 pay 0% Class 1 Secondary NICs
What is the Employment Allowance for Class 1 Secondary NICs? IN TAX TABLES
£5,000 per employer (not per employee)