Question about Employer's NIC, arising from pay slip

Dekazer

Afternoon all.

Firstly, apologies if this isn't the best place for my question - I had a good look through the forums and I couldn't immediately see anywhere better.

We have a question arising from my OH's rather confusing payslips. A bit of background: OH is a driver working for an agency. The agency hire him out to a number of client companies. The agency contract out the payroll to a payroll company. We are seriously considering OH leaving the agency and going self-employed, and we're trying to work out how much better of we would be versus how much time it would take to administer

On OH's payslip, there are a number of receipts and a number of deductions:

• The payroll company deducts 7.7% for holiday pay, pre tax.
• The payroll company deducts 7.2% as their own administrations charge, pre tax.
• The payroll company deduct 3.1% for 'Employers NIC', pre tax.
• The remaining 82% is OH's taxable pay, which is taxed then paid.

Our question is, why is the Employer National Insurance Contribution being deducted from OH's pre tax wages? Is that standard?

Thanks very much for your help,

Deks

agrinnall

It is indeed standard for employer's NI to be deducted (somebody has to pay it after all) but I'm not sure why it's only 3.1%, I would expect it to be more like 13%.

Dekazer

Thank you for your answer.

Doesn't that mean that we're paying it twice? OH is paying 'Employer's NIC' before tax, and a second time as standard 'National Insurance' (at 4.4% of taxable pay alongside PAYE at 6.4%)?

It totals 3.1% of the Gross pay, then an additional 10.8% of the taxable pay. Maybe it's just written confusingly on the payslip?

agrinnall

No, you are confusing employee's and employer's NI. He pays employee's NI and income tax on the taxable pay that remains after the deductions you listed in the OP.

I'm not sure of the percentages you've given, it would be easier to advise if you gave some actual figures so that we try to work out how they have been arrived at.