advice on how much NI etc I pay as an employer

julieanna

Hi,
I am about to open a shop and am going to need to employ somebody either part time or full time but I am having trouble finding out how much tax I pay for them (or do they pay it) and how much national insurance do I have to contribute.
I am intending on paying a full time member of staff around £60 per day 5 days a week based on a 8.5 hr day = £300 per week, also if I employ somebody for 15 hours pw instead what amount am I obliged to pay ?.
Obviously as a new business i dont want to pay any more than i have to because that all comes from my profits.
Lastly is it better to pay them monthly.
Any advice would really appreciated.

LittleVoice

Is the person working 8.5 hours a day taking a lunch break in that time? Depending on their age they would be entitled to at least a 20 mins (unpaid) break during a 8.5 hour day (it would be longer for a young person).

For your cash flow, it would be better to pay them monthly - as long as you paid them at the end of the month.

If you pay a full-time person £300 then you would need to pay someone in the same role for 15 hours a week at the same rate per hour as the full-time person. The actual amount depends on whether the 8.5 hours includes a lunch break. You cannot pay a part-timer at a lower rate than a full-time person.

Have you every been employed yourself? If so you would know that the employee pays the tax from their pay but the employer deducts this and pays it over to HMRC on their behalf.

You would also need to deduct employees NI (unless they were over state retirement age) and would need to pay employers NI (12.8%) whatever their age.

julieanna

Thanks Littlevoice,
I have had my own business for quite a few years (as a locksmith), so am a bit out of touch with these type of issues.
I was hoping to pay them for 40 hours per week (not including the 30 mins per day for breaks which I believe you said I dont have to pay them for).
So, if pay them £7.50 per hour over 40 hours that would equate to £300 per week, based on these figures how much would it cost me per week to employ this person including whaatever extra contributions I would have to pay ?.

heretolearn_2

We can't tell you that. It depends on their tax code and NI code. Even if we worked it out for you on standard ones, it might change.

You have to run a proper payroll system. Register as an employer with the HMRC. They will give you a PAYE reference number and send you a lot of useful information. Bear in mind you need to give proper payslips and do a P60 annual return for the employee each year, and a P35 annual return to the HMRC. But once you register, the HMRC will give you what you need to do and I think they even send a CD with a simple paye system on it.

Or get a bookkeeper/accountant to do it all for you.

It's really not something we can do for you.

Hammyman

heretolearn wrote: »

We can't tell you that. It depends on their tax code and NI code. Even if we worked it out for you on standard ones, it might change.

There are only standard National Insurance rates. Your Tax code has nothing to do with it.

To the OP, the full tables are here: http://www.hmrc.gov.uk/rates/nic.htm

Looks like 12.8% once above secondary threshold.

LittleVoice

heretolearn wrote: »

We can't tell you that. It depends on their tax code and NI code. Even if we worked it out for you on standard ones, it might change..

The employee's tax code doesn't affect how much it costs the employer to employ them. The employee is due to have tax deducted from the pay they receive. I don't think the OP was thinking of paying the £300 a week as a nett sum.

So basically take whatever you will pay them (let's say £300) and add 12.8% for the employers NI. (Total - pay and NI - £338.40 in this case).

If you take on employees you also need employers liability insurance. You need to get a quote for that to factor into your calculations for your business plan.

LittleVoice

Hammyman wrote: »

There are only standard National Insurance rates. Your Tax code has nothing to do with it.

To the OP, the full tables are here: http://www.hmrc.gov.uk/rates/nic.htm

Looks like 12.8% once above secondary threshold.

Secondary threshold is £110/week. So if you want precision, deduct £14.08 from the amount I suggested above as being pay plus E'ers NI.

Savvy_Sue

I think we usually add 12% to their gross pay, plus 2% for Employer's pension contribution, to the gross salary we expect to pay someone when we're funding a post.

Although it isn't yet legally required to pay into a pension for all staff, I think that's coming, so do add a little leeway into your figures. Plus bear in mind whether you'll need some casual staff to cover holidays / sickness etc.

I'd suggest looking at businesslink and ACAS for employment guides. It's quite important to get it right ...

julieanna

Thanks to you all for your input, much appreciated.
Regarding employers liability, I got a quote for employers and public liability and insurance for the shop and stock etc through the fsb (and telling them I had a really good quote from natwest which was a lie :eek:) which came down to £262.00 in the end which i am well happy with .

Mudd14

Its also worth adding on 12.07% to account for their holiday fund!

LittleVoice

Mudd14 wrote: »

Its also worth adding on 12.07% to account for their holiday fund!

I would assume that the OP would be paying them when they are on holiday and that that is included when working out an annual figure for their basic pay - but you are right to give a reminder in case I am wrong.