Information about National Insurance Contributions
NIC for Company Directors
Because company directors are often paid irregularly, they are assessed on an annual basis (not weekly or monthly) which takes into account their total earnings from the start of the tax year.
Employee National Insurance Contributions
Employee NIC is not deducted from the employee’s pay before calculating income tax. Employer contributions are deducted from employer’s profits for tax purposes.
Upper Accruals Point
The main purpose of the Upper Accruals Point (currently £770) is that it establishes the upper level of earnings for S2P calculations and contracting-out rebates.
Employed and Self-Employed
If income/profits from self-employment is more than£7,956, then Class 1, Class 2 and Class 4 apply. Otherwise only Class 1 and Class 4 apply.
Class 1A Benefit In Kind
The calculation for Class 1A benefit in kind = 13.8%
Class 4 National Insurance Contributions
Class 4 NICs are collected under self-assessment twice a year.
Entitlements from Class 2 Contributions
Only class 2 contributions give entitlement to contributory state benefits such as the basic pension but not S2P.