SECTION E: TAX AND NATIONAL INSURANCE

National Insurance

Rates of National Insurance are:

0% on income up to £153 per week or £663 per month.

12% (contracted out 10.6%) on income between £153 and £805 per week
                                                           or between £663 and £3488 per month.

2% on income over £805 per week or over £3488 per month.

If an employee has entered a final salary occupational pension scheme, the employee may ‘contract out’ and pay National Insurance at a lower rate. In this case, the employee will receive, from the state, only the basic state retirement pension.

QUESTION

Ashton earns £208 per week.

Ashton is NOT contracted out for National Insurance contributions.

Calculate the amount that Ashton pays per week in National Insurance contributions.

           
(a) Calculate Ashton’s weekly income above 0% National Insurance threshold
Weekly income above 0% National Insurance threshold: £    
(b) Write down applicable NI rate
Ashton’s NI rate:   %  
(c) calculate the amount of NI which Ashton pays each week.
NI paid each week: £