Progress is an important part of any business, and we are always striving to provide the very best service. Because of this we are now utilising a cloud service called BrightPay Connect.
We will provide you with your own employer dashboard which you access via an app or online. From here you will be able to access the many benefits using Connect provides.
Access to numerous payroll reports whenever you need them
Provide your accountant direct access to your dashboard enabling them to download any reports they require
Access to previous payrolls
Employees will have their own personal dashboard where they will receive payslips directly, saving you time handing them out each pay period
Employees can access previous payslips, saving you time when requests come in for previous period payslips, eg for mortgage applications
P60s will be made available directly to employees through their dashboards
Employees can update their personal information which will feed directly through it us
Annual leave calendar where the employees can request annual leave, this will go directly to you to authorise. If authorised the calendar will be updated. This then gives you a company wide view for who is on holiday and annual leave remaining for each employee
Online access to personal dashboard via the app or online
Payslips made directly available via their dashboard along with previous payslips
Update personal information
Annual leave requests
Remaining annual leave balance
We will still be providing clients with the payroll output each month via an email so you have a copy to hand and we will be just as available to assist with any questions.
For existing clients, the process to set up the employer and employee dashboards is a quick and simple process which requires very little input from your side. We will also be on hand to assist with any questions you or your employees have.
Please get in touch if you have any questions regarding the cloud service or if you require a free quote for payroll services.
There have been many stories in the press over the past few days regarding the potential increase to National Insurance to help fund social care in the UK. The potential increase is reported to be 1% and there are calls from within the Conservatives to increase this to 2%.
For information regarding the current rules on employees National Insurance and how this is calculated please check out our blog post.
Following on from part 1 where we looked at employees National Insurance, this week we are going to explain what employers National Insurance is and how it’s calculated. We are specifically going to be looking at employers Class 1 National Insurance.
What is employers Class 1 National Insurance?
Employers NI is a direct cost to the business and an important part in understanding the costs associated with having employees.
Employers pay Class 1 National Insurance based on their employees’ earnings and NI category letter. Employers NI is calculated on a pay-by-pay period basis unless the employee is a director in which case there are two calculation methods which will be discussed later in this post.
What is the employer Class 1 National Insurance Rate?
The employers NI rate for 2021/22 is 13.8%.
Is National Insurance calculated on all earnings?
Employers NI is nearly always due if you have employees, though there are some exceptions. If an employee has the category letter H, M or Z and earns below £4,189/mth no employers NI is due.
The table below from HMRC shows the NI rates based on category letter and earnings.
£120 to £170 (£520 to £737 a month)
£170.01 to £967 (737.01 to £4,189 a month)
Over £967 a week (£4,189 a month)
Employers NI isn’t payable until an employee earns above the secondary threshold (£737/mth). The table below shows the relevant employer NI thresholds.
2021/22 monthly thresholds
Secondary Threshold (ST)
Upper Secondary Threshold (UST)
Apprentice Upper Secondary Threshold (AUST)
How to calculate employers National Insurance
Now we’ve had a chance to explain what employers NI is, it’s time to look at some examples:
The employee is paid gross £1,500/mth,
1,500 – 737 = 763
13.8% of 763 = £105.29 employers NI due
The employee is paid gross £3,000/mth,
3,000 – 737 = 2,263
13.8% of 2,263 = £312.29 employers NI due
The employee is paid gross £600/mth,
As the employee is earning below the Secondary Threshold (£737/mth) no employers NI is due.
The employee is paid £1,000/mth and is aged 18,
Even though the employee is earning over the Secondary Threshold they are under 21 which means no employers NI is payable. The employee would have the NI category letter M in this instance.
NI Employment Allowance
Companies which are eligible to claim the NI Employment Allowance can reduce the annual employers Class 1 National Insurance by up to £4,000.
If you are claiming the NI Employment Allowance you will still see the employers NI on the P32, though it should also show the amount of employers NI being waived.
If you don’t claim the full £4,000 within the tax year you can’t carry over the remaining amount to future tax years.
You need to be a business or charity
You employers Class 1 NI liabilities for the previous tax year was under £100,000
The company needs to be within the de minimis state aid threshold if applicable
You can’t claim if the only person earning above the Class 1 NI secondary threshold is a director
If you are a connected company, there are numerous eligibility criteria which can be found here.
You can claim Employment Allowance for the previous 4 tax years going back to 2017/18. You need to be mindful that the eligibility criteria and total claimable amounts can be different in previous tax years.
Employers NI for directors
There are two methods of calculation for directors:
Standard, National Insurance is calculated on a year-to-date basis. Employers NI isn’t calculated until the earnings breach the annual Secondary Threshold (£8,840).
Alternative, National Insurance is calculated on the pay for that period. When the last payroll of the tax year is processed there needs to be a re-calculation of NI for the entire tax year and any underpayment needs to be made along with the month 12 taxes.
Understanding employers Class 1 National Insurance and how it’s calculated will not only help you further understand the reports produced each pay period but also help caluclate the cost of employment.
When I started writing a blog post on National Insurance (NI) I initially addressed both employees and employers NI together. The further I got into the subject the more I realised employees and employers NI would work better split into two posts. This week we are going to look at employees NI, with part 2 coming next week when we look at employers NI.
What is the purpose of employees NI?
Before we look at how employees NI is calculated it’s worth understanding the purposes of NI.
What is National Insurance used for:
Basic State Pension
Additional State Pension
New State Pension
Contribution-based Jobseeker’s Allowance
Contribution-based Employment and Support Allowance
Bereavement Support Payment
Who pays National Insurance?
If you are aged between 16 and SPA (State Pension age) you must pay NI if you are either:
An employee earning above £184/wk or £797/mth
Self-employed and making a profit of £6,515 or more a year
Even if you don’t pay employees NI because you don’t earn enough, if you do earn between £520 and £797/mth your contributions are treated as having been paid to protect your NI. This is because your earnings are within the Lower Earnings Level (LEL).
How much NI do you pay?
The amount of employees NI payable depends on your earnings and NI category letter. The majority of people will be category A, but this won’t always be the case. Below is a table which shows the different categories and percentages dependent on earnings.
£120 to £184 (£520 to £797 a month)
£184.01 to £967 (£797.01 to £4,189 a month)
Over £967 a week (£4,189 a month)
The National Insurance category you belong to will be displayed on your payslip. The table below outlines the different categories.
All employees apart from those in groups B, C, J, H, M and Z in this table
Married women and widows entitled to pay reduced National Insurance
Employees over the State Pension age
Employees who can defer National Insurance because they’re already paying it in another job
Apprentice under 25
Employees under 21
Employees under 21 who can defer National Insurance because they’re already paying it in another job
Your earnings in the pay period will be the final part in determining how much NI you pay. The table below outlines the different monthly thresholds. HMRC also has a weekly thresholds table.
21/22 Employee NI Monthly Thresholds
Earnings per month
2021/2022 tax year
Lower Earnings Limit (LEL) Employees do not pay National Insurance but get the benefits of paying
Primary Threshold (PT) Employees start paying National Insurance
Upper Accrual Point (UAP) Employees with a contracted-out pension pay a lower rate of National Insurance up to this point
Upper Earnings Limit (UEL) All employees pay a lower rate of National Insurance above this point
Employee NI Calculation Examples
Using everything we have learnt so far it’s now time to work through a few examples. As category A is the most common NI category, I have used this for all three examples below. The same figures below would be applicable for category letters H & M as well due to the percentage rates being the same.
Employee earning £1,000/mth
Using the monthly thresholds table above, earnings between £797/mth (Primary Threshold) – £4,189/mth (Upper Earnings Limit) are calculated at 12%, so the calculation is,
1,000 – 797 = £203 NI’able pay
12% of 203 = £24.36 employees NI
Employee earning £4,500/mth
An employee earning £4,500/mth is spanning several NI thresholds, LEL to UEL. When we do the calculations, we need to determine the amount of earnings in each band.
LEL 0 – 797 = £797 @ 0% = £0 NI
PT – UEL 797 – 4,189 = £3,392 @ 12% = £407.04
UEL and above £4,189 to £4,500 = £311 @ 2% = 6.22
Total employees NI = £413.26
Employee earning £600/mth
No employees NI would be due. This is because the employee is below the Primary Threshold of £797/mth. Nevertheless, as the employee is earning between £520 and £797/mth this falls within the Lower Earnings Limit which means the employee contributions are treated as having been paid to protect their NI.
What happens if you have more than one job?
As NI is calculated on a job-by-job basis, each job will be handled separately for NI purposes. This is different to income tax which is based on all earnings.
How is NI calculated if you are a director?
There are two methods of calculation for directors:
Standard, National Insurance is calculated on a year-to-date basis. The director doesn’t start paying NI until they breach the annual Primary Threshold (£9,568).
Alternative, National Insurance is calculated on pay for that period. When the last payroll of the tax year is processed there needs to be a calculation of NI for the tax year to see if more NI is due, which then needs deducting from the director’s final payment.
I hope this post has provided you with the tools to calculate your own NI, and more importantly to understand how the employees NI on your payslip is achieved each pay period.
Next week we will post the second part of the two part series on National Insurance, How Is National Insurance Calculated Part 2: Employers NI
KIT days allow an employee to work up to 10 working days during their maternity or adoption leave. If you are on shared parental leave you can work up to 20 days, these are called SPLIT days. The 20 SPLIT days are in addition to the 10 KIT days.
KIT days can be used to help ease you back into work after maternity leave, or to keep in touch whilst on maternity leave.
When can I take KIT days?
You can take KIT days at any point during your maternity leave as long as it’s not within the first two weeks of giving birth.
Are KIT days compulsory?
No, KIT days are not compulsory. You would need to agree with your employer if and when you are going to take KIT days. Your employer can’t force you to take KIT days.
What Happens if I don’t work a full day when taking a KIT day?
It doesn’t matter if you have only worked an hour, that will still be classed as a whole KIT day.
If, however you are just nipping in to work to show your new baby to colleagues, this doesn’t count towards a KIT day.
Keeping in touch with work.
Your employer does have the right to contact you while you are on maternity leave. Your employer should tell you:
If jobs are being advertised
If there are any promotion opportunities
If they are planning reorganisation or redundancies
You can also discuss if there is anything else you would like to be notified of whilst on maternity leave.
Can I have more than 1 KIT day at a time?
Yes you can. It’s up to you and your employer how many KIT days you work in a row, or if you work them all as stand alone days.
What happens if I work more than 10 KIT days?
Whilst on maternity leave if you work after you have taken your 10 KIT days you would lose the 1 weeks SMP for the week in your Maternity Pay Period in which you have done the work. Your maternity leave would then come to an end.
HMRC give the example,
“If a week in your Maternity Pay Period contains the last KIT day and you do a further days work in the same week for the employer paying you SMP, you will lose SMP for that week.”
How much will I be paid for your KIT day?
HMRC guidance does not state how much your employer should pay you for KIT days, though you must at least receive you the SMP/SAP/ShPP due for the week.
90% of your average weekly earnings (before tax) for the first 6 weeks
£151.97 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks
Just like normal wages, SMP is taxable and NI’able.
What happens if I have more than one employment?
If you receive SMP in more than one job you are entitled up to 10 KIT days in each employment you receive SMP.
What kind of work can I do during a KIT day?
You should agree with your employer what work you will carry out during your KIT day(s).
KIT days are often used as a good way to have a phased return to work. Or to trial working on a part time basis if that is what you wish to do once your maternity leave finishes.
Does my employer have to keep my job open?
Your employer must keep your job open if you return within 26 weeks of your maternity, adoption or shared parental leave. If you do take more than 26 weeks leave, you will still have the right to your job, or a similar job. A similar job means the same or better terms as your current employment contract. If you unreasonably refuse to take the similar job your employer can take this as your resignation.
If you are interested in our payroll and workplace pension services please get in touch!
At Alderley Payroll Services we believe in transparency when it comes to pricing our payroll services. As well as our downloadable pricing guide, we also have a sample pricing guide and the option of contacting us for help with quotes.
All payroll services also include workplace pension administration.
We have an easy-to-use downloadable pricing guide. Once downloaded all you need to do is enter the number of employees in the yellow box and you will get an instant price per pay period, along with the price per payslip.