The Employer NI Calculator allows you to calculate Employer National Insurance Contributions (NICs) and understand the true cost of an employee and your total employment costs.
Employers National Insurance Calculator
Employer NIC Calculator (Guide)
- Employer's national insurance calculator
- What is Employer National Insurance?
- Types of National Insurance contributions
- What is employer Class 1 National Insurance?
- Thresholds for Class 1 Employer National Insurance Contributions
- National insurance rates
- How to use the employer's national insurance calculator?
- How are national insurance contributions payable?
- What is the National Insurance Employment Allowance?
- Employer National Insurance: What is a PAYE settlement agreement?
- How to report your expenses and benefits to HMRC
- What are the Employer NICs Duties?
Employer's national insurance calculator
As an employer, you are responsible for paying NIC on behalf of your employees.
Use employer NI contributions calculator to estimate your NIC liabilities for new or existing employees for tax years up to 2022/23. Employer's NICs are paid in addition to an employee's salary and are due every month.
The Employer NI Calculator allows you to calculate Employer National Insurance Contributions (NICs) and understand true cost of an employee.
We at Experlu enjoy making tax calculators as simple as possible. As an employer, we understand that calculating National Insurance Contributions for yourself and your employees may be time-consuming. So, use our employer's NI calculator monthly to cross-check your calculations much simpler and faster.
What is Employer National Insurance?
National Insurance is a tax on income paid by employers and employees.
For the worker, national insurance contributions are directly paid from their income, deducted by the company from their gross pay to be given to HMRC.
For the company, employer NIC is paid on top of the worker's income and benefits, again to be paid to HMRC. It is a cost the company bears in addition to the employee's gross pay.
Technically, NI is a social security contribution rather than a tax, but as a compulsory payment, it is a form of taxation for all purposes and intent.
By law, all employers must pay NIC on the salaries paid to their employees to fund the NHS, the state pension and numerous benefits, including maternity pay and statutory sick pay.
Equally, employers have to deduct national insurance on the employee's behalf to allow them to qualify for the state pension and specific benefits, such as contribution-based jobseeker's allowance and employment and support allowance.
Types of National Insurance contributions
Employers pay Class 1A and Class 1B National Insurance contributions on the expenses and perks they provide to their employees once a year. These are included in the PAYE bill of the employer.
- Class 1A - These are due on job benefits, such as business phones that employers provide to their employees. At the end of each tax year, they must be recorded and paid. They are based on the value of taxable benefits supplied in the preceding tax year and are determined at the 13.8 per cent rate.
- Class 1B - Class 1B contributions are due if an employer has a PAYE settlement agreement that requires them to make a single annual payment to meet all of their tax and benefit obligations. Employees must pay NICs on minor or irregular taxable expenses or benefits.
What is employer Class 1 National Insurance?
Employers must pay 'secondary' Class 1 National Insurance contributions (NICs) on their employees' income. Primary Class 1 NI contributions are an employee's National Insurance contributions (also collected through PAYE).
The employment allowance decreases the amount of employer NICs payable by some companies up to the allowance limit (currently £5,000 per year). The decrease is only accessible to companies with a total NIC bill below £100,000. This indicates that the allowance is available to at least 90% of small firms.
Thresholds for Class 1 Employer National Insurance Contributions
Employers pay Class 1 contributions of 13.8% on all income above the secondary threshold for almost all workers: for 2023-24, this limit is £175 per week, £758 per month or £9,100 annually.
National insurance rates
The amount of employers' national insurance payable varies depending on how much the employee earns.
How to use the employer's national insurance calculator?
You can determine the employer NICs by using the Employers NI Calculator to know the actual cost of an employee and your total employment expense.
The Employers NI Calculator 2023-2024 assists in figuring out how much you pay in NICs so you can modify your financial planning for payroll.
This self-emplyed NI and tax calculator works in the following way:
- Enter each employee's annual gross pay, including overtime or bonus pay.
- Employer NICs can be calculated using the calculator on an annual, monthly, weekly, and daily basis.
How are national insurance contributions payable?
As an employer, you're liable for deducting primary NIC directly from your workers' pay through PAYE as part of payroll. Then, on the employee's behalf, this is paid to HMRC.
You will also pay secondary contributions to HMRC as part of your PAYE bill. In most instances, your payroll software will calculate employer NI.
What is the National Insurance Employment Allowance?
The National Insurance Employment Allowance enables qualified employers to decrease their employer NI liability by up to £5,000. If your Class 1 liabilities in the preceding tax year were £100,000 or less, you could apply for the Employment Allowance while processing payroll.
The scheme aims to support small businesses by lifting some of the mandatory employer tax contributions. For instance, it can go some way in alleviating the impact hiring new staff may have on your income and expenses.
Employer National Insurance: What is a PAYE settlement agreement?
You can streamline employers' NICs by negotiating a PAYE settlement agreement with the HMRC. It can cover the following benefits and expenses under a settlement agreement:
- challenging to manage through PAYE (for example, where employees share a benefit).
You cannot include some items such as beneficial loans, cash payments, or large benefits.
Once you have agreed on a settlement agreement, you can create a single Class 1B employer NIC payment by 22nd October following the tax year it applies to, depending on the total amount of all the benefits covered by the agreement.
How to report your expenses and benefits to HMRC
The monthly payroll is typically used to record expenses and benefits that are not exempt from NIC's responsibility or provided as part of a salary sacrifice plan. Expenses that aren't "rolled" must be mentioned on a P11D form.
To simplify reporting, employers can reimburse workers based on a scale or flat rate rather than the actual costs incurred. The following are the scale rates:
- HMRC-approved fuel advisory rates
- Rates agreed in written form by HMRC
- Expenses and benefits paid using accepted scale rates are not required to be reported by HMRC.
What are the Employer NICs Duties?
Employers have a duty to:
- Deduct the employees' primary Class 1 contributions from their pay
- Every time a payment is made to an employee under RTI, you must electronically submit information about their pay and deductions to HMRC (including any Class 1A contributions necessary on termination settlements over £30,000 and sporting testimonials over £100,000).
- Pay primary Class 1 payments to HMRC online by the 22nd of the month following the end of that tax month, including secondary contributions due on workers' wages, Class 1A contributions necessary on termination settlements over £30,000, and sporting testimonials over £100,000 (or 19th otherwise)
- Maintain records of the salaries and NICs paid for each employee.
- Adhere to year-end procedures, Form P11D(b) defines the Class 1A payments due on taxable benefits.
- Determine Class 1B contributions for items covered by PAYE settlement agreements (PSAs).
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