Arrears Payment NI Increase Affect

Crazycat89

Good Afternoon,

I wonder if someone can assist with this query.

Basically the organisation I work for has recently gone through a Pay & Grading review, the outcome of which was decided some months ago.. however as an individual (along with some others) who was negatively impacted by the outcome it has since been reviewed and the original outcome I expected now amended.

This means however I am likely to receive a large payment of arrears in June, but I am now concerned due to the new NI rate. The pay dates back to July 2020 and I am now concerned I will pay the new increase on the full amount?

Does anyone know what would happen in this instance and whether it’s possible to reclaim this if it is all paid at the new rate?

Many Thanks

Marcon

Crazycat89 said:

Good Afternoon,

I wonder if someone can assist with this query.

Basically the organisation I work for has recently gone through a Pay & Grading review, the outcome of which was decided some months ago.. however as an individual (along with some others) who was negatively impacted by the outcome it has since been reviewed and the original outcome I expected now amended.

This means however I am likely to receive a large payment of arrears in June, but I am now concerned due to the new NI rate. The pay dates back to July 2020 and I am now concerned I will pay the new increase on the full amount?

Does anyone know what would happen in this instance and whether it’s possible to reclaim this if it is all paid at the new rate?

Many Thanks

NI is calculated on the basis of the year in which the payment is made. Depending on the size of the arrears payment, it might work in your favour and you could be paying 3.25% rather than 13.25% on some of it. See https://www.litrg.org.uk/tax-guides/employment/what-national-insurance-do-i-pay-employee

Crazycat89

Marcon said:

NI is calculated on the basis of the year in which the payment is made. Depending on the size of the arrears payment, it might work in your favour and you could be paying 3.25% rather than 13.25% on some of it. See https://www.litrg.org.uk/tax-guides/employment/what-national-insurance-do-i-pay-employee

Thank you! That’s really helpful and also reassuring. ☺️