Workbook 2 NI

Question 1

Class 1 contribution thresholds

Answer 1

Employee = £183 
Employer = £169 
UEL = £962

Question 2

Class 1 employee

Answer 2

£183 to £962 12%
2% anything over
THESE STOP AT SPA

Question 3

Class 1 employer

Answer 3

£169 and up is 13.8%

Question 4

Apprentice under 25

Answer 4

employers don’t pay NI!

Question 5

Collection of NI

Answer 5

Through PAYE
Employer responsible
Class 1A on 19th July
Penalties 5% after 6 months, another 5% after 12 months.

Question 6

Credits for NI payment periods for e.g.;

Answer 6

• Full time training.
• Unemployment and sickness.
• Statutory maternity pay, paternity pay, adoption pay periods.
• Income below primary contribution threshold but at or above LEL.
• Jury service.
• When aged 16-18.

Question 7

Associated Employment

Answer 7

 If there is a link between different employments though employer or job, then earnings are aggregated.
 If weak link and separate PAYE schemes then no aggregation necessary.

Question 8

Class 2 = flat rate £3.05 per week

Answer 8

 Small earning exception limit is less than £6,475 pa. It is possible to apply for a small earnings exemption certificate if earnings do not exceed £6,475. Have to be UK resident.
THESE STOP AT SPA.

Question 9

Class 4 = earnings related on profits.

Answer 9

 Age 16 to state pension age.
 9% on profits between lower profits limit (£9,500) and upper profits limit (£50,000).
 2% on earnings above upper profits limit.
Losses from previous year carry forward!!

Question 10

Collection of NI Class 2/4

Answer 10

 Class 2 – usually by DDM can be 1/4ly on demand or 4 weekly.
- Must notify NICO of liability.
- Penalty for late notification and late payment.
 Class 4 – by self-assessment
- On account on Jan 31st in year of assessment and 31st July after year
- Balancing payment 31st Jan following year.

Question 11

Class 3 – Voluntary

Answer 11

 Fill gaps in payment record and increase entitlement to benefits.
 £15.30 pw flat rate.
 Must be resident in UK throughout period of gap.
 Can only pay up to 6 years after the tax year to which contributions relate.
 Collected as per class 2.
 Cannot be paid in year person reaches State Retirement Age.

Question 12

Maximum Payments

Answer 12

 Maximum limits are set to avoid excessive liability where multiple jobs are held.
 Highly complex calculations. E.g.
- Class 1 & 2 – total main rate class 1 and 2 must not exceed 53 x maximum weekly class 1 primary rate.