So confused with nic

joanne2510

I have no idea how to calculate the NICs when they go over UEL especially for the ni letter F some examples would be great please

payrollpro

Joanne,

Sorry, I didn't manage to respond to this sooner but here is an example.

Say an employee has £5,000 in NIable pay and is in the company money purchase pension scheme. They would be liable to NIC's at category F.

Category F carries a contracted out rebate of 1.6% employees and 1.4% employers.
Employee, at 2011 rates!
Up to LEL, its exempt, so £442 the NI is zero
LEL to PT, its rebate only, so £602 - £442, £160 @ 1.6% is -£2.56
PT to UAP, its contracted out rate, so £3,337-£602, £2,735 @ 10.4% is £284.44
UAP to UEL, its standard rate, so £3,540 - £3,337, £203 @ 12% is £24.36
UEL to total, its additonal rate, so £5,000 - £3,540, £1,460 @ 2% is £29.20
Total NIC, employees £335.44

Employers, however
Up to LEL, its exempt, so £442 the NI is zero
LEL to ST, its rebate only, so £589 - £442, £147 @ 1.4% is -£2.06
ST to UAP, its contracted out rate, so £3,337-£589, £2,748 @ 12.4% is £340.75
UAP to UEL, its standard rate, so £3,540 - £3,337, £203 @ 13.8% is £28.01
UEL to total, its standard rate, so £5,000 - £3,540, £1,460 @ 13.8% is £201.48
Total NIC, employers £568.18

The thing to do is take each step and build the payments up till you have exhausted all of the NIable pay. As you can see the two key differences for 2011 are, one that the point at which NIC's become liable is different for ees and ers, PT and ST, and secondly there is no additional rate for employers, the standard rate applies from UAP above.

Hope this helps.