NIM07071 - Class 1 NICs: Payments made under employment legislation: Re-allocating primary NICs paid on a payment made under a reinstatement order, a re-engagement order, an order for the continuation of a contract of employment or a protective award:
How to apportion the amount of NICs paid between tax years: Example
Employer Z makes a payment under a re-engagement order 바카라 사이트“ see NIM07030 바카라 사이트“ NIM07031 바카라 사이트“ to an employee on 31 July 2022. The gross amount of the payment is £4,000 and is in respect of the period 7 March 2022 to 31 May 2022, which is 86 days.
The employee바카라 사이트™s earnings in the 2021 to 22 tax year were slightly insufficient to make the year qualifying for benefit/pension purposes. They have worked out that they can make the 2021 to 22 tax year a qualifying one if the NICs they paid in the 2022 to 23 tax year on the re-engagement order payment are re-allocated to the 2021 to 22 tax year. So they write to HMRC and ask for this to be done.
Employer바카라 사이트™s calculation of earnings limits and amount of primary NICs due
Employer Z has calculated:
- the lower earnings limit (LEL); and
- the Primary Threshold (PT); and
- the amount of primary NICs due on the payment
as follows:
| Item | Calculation | Result |
|---|---|---|
| LEL | £123 (normal weekly LEL) ( 7 x 86) | £1511.14 |
| PT | £9,880.00 (normal PT) (365 x 86) | £2328.00 (rounded up to nearest pound) |
| Primary NICs due | £4,000 - £2,328 = £1672 x 13.25% (main primary NIC rate) | £221.54 |
Calculation of the amount of primary NICs to be re-allocated
| Item | Calculation | Result |
|---|---|---|
| The number of days in the earnings period that falls in the 2022/23 tax year | 6 April 2022 to 31 May 2022 | 56 days |
| The amount of the gross payment that falls in the 2022/23 tax year | £4,000 x 56 ( 86) | £2604.56 |
| The amount of primary NICs payable on £2,604.65 | £221.54 x 56 ( 86) | £144.26 |
| The number of days in the earnings period that falls in the 2021/22 tax year | 7 March 2022 to 5 April 2022 | 30 days |
| The amount of the gross payment that falls to be re-allocated to 2021/22 tax year | £4,000-£2604.56 | £1395 this the amount to be reallocated to the tax year 2021/22 |
| The amount of primary NICS payable on £1395.35 | £221.54-£144.26 | £77.28 this is the amount to be reallocated to the tax year 2021/22 |