ACCA TX ^UK Syllabus B. Income Tax And Nic Liabilities - The annual employment allowance - Notes ^{4 / 4}

There is an employment allowance of £5,000 available per employer to reduce the employer’s Class 1 NIC payable.

This allowance cannot be used to reduce the employer's Class 1A NIC payable or the employee's Class 1 NIC payable.
It is only available to reduce the employer's Class 1 NIC payable.
This will reduce the liability that results from the calculation of Employer’s Class 1 NIC by £5,000.
Do not mistake this for a lower limit.

Arya has a salary of £52,000 per annum.

What will her:
1) Employee’s Class 1 NIC payable be?

What will her employer's:
1) Class 1 NIC payable be?
2) Class 1 A NIC payable be?

Employee’s Class 1 NIC:
£12,570 * 0% =	£0
(£50,270-£12,570) = £37700 * 8% =	£3,016
(£52,000-£50,270) = £1,730 * 2% =	£35
Total Employee’s Class 1 NIC payable =	£3,051
Employer’s Class 1 NIC: £9,100 * 0% =	£0
(£52,000-£9,100) = £42,900 * 13.8% =	£5,920
Employer’s Class 1 NIC liability	£5,920
Less annual employment allowance	(£5,000)
Employer’s Class 1 NIC Payable	£920
Class 1 A NIC payable=	Nil

There is no Class 1 A because the employee was not given any employment benefits.