CH 20 & 21 - Class 1 NIC

Question 1

What constitues earnings fro NIC purposes?

Answer 1

Earnings include the following:
* Cash payments (other than reimbursement of genuine business expenses).
* Payments in kind that can be surrendered for cash.
* Readily convertible assets.
* Settlement of employee’s personal liability.
* Vouchers (except childcare to the extent it does not exceed the exempt amounts).

Question 2

When no Class 1 secondary NIC is due to be paid (between 2ndary treshold and upper secondary treshold)?

list occasion & rulles

Answer 2

• employees aged <21 &
• apprentices <25
• armed forces veterans, within 12mts from 1st day of their 1st civilian employment
• certain employees employed at a freeport tax site up to the freeport secondary threshold of £25,000

Question 3

How HMRC prevents manipulation of primary Class 1 NICs paid in relation to directors?

Answer 3

To prevent manipulation of the amount of primary Class 1 NICs paid, directors have an annual earnings period.

for directors the calculation of NICs is carried out on a cumulative basis

Question 4

Amounts placed in an account from which the director can draw funds or amounts left in the company but placed at the director’s disposal are treated as …

not sure

Answer 4

Amounts placed in an account from which the director can draw funds or amounts left in the company but placed at the director’s disposal are treated as earnings for Class 1 NICs purposes.