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Directors national insurance calculation

Directors national insurance calculation

A company director pays himself £624 in month 1 of the tax year under PAYE.  In month two he pays himself £11,144.00.  

What would you expect the employee and employer NIC for month 2 to show?

The reason for the question is due to identifying a defauly blip in payroll software that BY DEFAULT is treating directors just like employees.  I have changed the settings, which did change the values BUT doing a manual calculation I still get a different figure.  Was just wonder if somebody can let me know what they get so that I can either confirm the software is still "iffy" or if its my calculations.


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20th Jun 2012 11:02

Manual calculation

As you appreciate, although directors can be processed as if they were ordinary monthly employees, the method has to be changed at the end of the year to the annual earnings basis.

The cumulative pay to Month 2 is £11,768.  On the annual earnings basis and assuming that we are dealing with 2012/13, the secondary threshold is £7,488, so the Er's contribution at 13.8% should be £590.64.  The primary threshold is £7,605, so the Ee's contribution at 12% should be £499.56.

I hope I have done the maths correctly!

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By MikeJT
22nd Jun 2012 08:55

Thanks Euan.  It seems you

Thanks Euan.  It seems you and I agree............but the software doesnt.  I think a call to the IT department is now required.

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