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National Insurance Contributions – Thresholds from April 2011
Thursday, February 18th, 2010
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In a document for payroll system software developers, HMRC has provided more information about the split of the NICs earnings threshold (ET) from April 2011 into separate employee and employer thresholds. The legislation already defines them separately but, because they have traditionally been set at the same monetary level (e.g. £110 per week for 2010/11), they have both been known as the “earnings threshold”, even though that name does not appear in legislation.
From April 2011, the primary threshold (abbreviated to ‘PT’) will be set at a rate higher than the secondary threshold (abbreviated to ‘ST’), likely at a rate even higher than the tax threshold.
The number of columns on form P11 Deductions Working Sheet will not change, only the descriptions. The descriptions used by computerised payroll systems will also have to be changed.
- Column 1b becomes “Earnings above the LEL, up to and including the PT”,
- Column 1c becomes “Earnings above the PT, up to and including the UAP”.
The five-way split of earnings around the thresholds will not change and, for in-year recording and year-end reporting purposes, the split will use the PT, not the ST.
Also, for those employers who use the manual NICs Tables, the existing method of calculation will continue with an exact percentage calculation being carried out at the ST and PT figures, in the same way as for the LEL, ET, UAP and UEL at present. Similarly, the “mid-point” calculations within the £1 and £4 steps in the weekly and monthly tables respectively will be adjusted where necessary to take account of the exact ST and PT figures.
Further information:
Briefing Note – National Insurance Contributions (NICs) – Changes for 2011–2012 (not currently available online)
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