Paying employers national insurance on bonus?

Brenda89

Hi all,

I joined the forum today as I'm experiencing a bit of a pickle and I'm hoping someone here might know what to do. I'm full time employed by a company which pays a KPI based bonus and yesterday an email went around telling us that on the bonus we would have to pay employers national insurance as well as the usual employees national insurance and tax etc. As an employee, can they really ask me to pay the employers national tax?

Would really appreciate some advice.

Brenda

agrinnall

It depends on whether the bonus is contractual or discretionary, and if it's contractual what the contract actually says. If you can answer that the responses are more likely to be relevant to your situation.

Brenda89

It's a discretionary bonus

paddedjohn

Brenda89 wrote: »

It's a discretionary bonus

Then they can attach any conditions they want, you are under no obligation to accept the bonus if you don't want to.

BJV

I think the previous post is spot on if it is discretionary then they can ask you pay almost anything. That said I do not think that it is in the spirit of a bonus.

Undervalued

Brenda89 wrote: »

Hi all,

I joined the forum today as I'm experiencing a bit of a pickle and I'm hoping someone here might know what to do. I'm full time employed by a company which pays a KPI based bonus and yesterday an email went around telling us that on the bonus we would have to pay employers national insurance as well as the usual employees national insurance and tax etc. As an employee, can they really ask me to pay the employers national tax?

Would really appreciate some advice.

Brenda

Whether they can or not is a totally moot point!

As has been pointed out, it is a discretionary bonus so they can just reduce the amount of the bonus to cover the employer's NI which comes to exactly the same thing.

The only restriction on an employer's discretion regarding a bonus (or sick pay) is that they do not apply that discretion "perversely".

Malthusian

The bonus is subject to employer's and employee's National Insurance, so it doesn't really matter whether the employer deducts 13.8% National Insurance from the bonus or pays you a 13.8% smaller bonus and pays the National Insurance itself.

Am I right in thinking the employer previously paid the employer's National Insurance on bonuses, but is now saying employer's National Insurance will be deducted from the bonus but keeping the gross amount the same? In other words they're effectively cutting all bonuses by 13.8%, but pretending it's about tax. That's disingenuous, but perfectly legal.

Ask them if they'll pay your bonus into your pension plan instead. National Insurance isn't payable on employer pension contributions so in theory, they should be able to pass the saving on to you.

Brenda89

Thanks guys, looks like it's a good excuse to cut our bonus even further :-( I really could've done with not having to pay the extra 13.5% but hey ho, I guess there is nothing I can do.