Will an annual hororarium of £3000 incur national insurance.
Payroll software only seems to be monthly or weekly. Only directors seem to have calculations on an annual basis.
Related resources
Replies (3)
Please login or register to join the discussion.
Yes and no
If it is to be treated as paid in one go, then technically it is an employment payment in a single period and is subject to a hefty NIC bill.
I am assuming that we are talking about a small organisation making a payment to a single individual for something like being a treasurer. Assuming no other employees, and hence no PAYE scheme, I would hope that HMRC would accept it as a salary spread across an entire year (below NIC in any given period) but paid in one go simply to reduce admin costs. To remove doubt it should be paid over the course of the year so the actual individual payments are below the NIC limits.
It is still taxable income for the recipient. If the organisation paying has a PAYE scheme, then payment will have to be spread over the year to not incur NIC. This is because having a PAYE scheme will bring in a requirement to report this as an employment payment, even though it is overall below the limits itself.
No
You can have an annual earnings period if that is the regularity with which payment is made. Most payroll software isn't geared up to it though. See NIM08020.
Sometimes HMRC surprise in a good way
It is good to see that this exact sort of situation is considered by HMRC. Thanks for the link Steve.