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Employee Class 1 NI calculation
rawhammered
Posts: 118 Forumite
Hi, just reviewing my taxes over past couple of years and I’m not sure, but I think my employee NI contributions paid over for the last few years appear to be wrong. The amount paid appears to be too high, and when I called HMRC just now they agreed and tell me there appears to be a discrepancy between the monthly and annual submissions from my employer. They asked me to send them payslips from the last few years so that they can investigate (which I have done).
My calculations of what my employee NI that was due and what was paid are:
• 2017/18 – Taxable £44,779.70; Class 1a NI due £4,394 [(£44,779 - £8,164 x 12%]; NI paid £4,657.62
• 2018/19 – Taxable £44,492.15; Class 1a NI due £4,328 [(£44,492 - £8,424) x 12%]; NI paid £4,794.05
Is this right?
My calculations of what my employee NI that was due and what was paid are:
• 2017/18 – Taxable £44,779.70; Class 1a NI due £4,394 [(£44,779 - £8,164 x 12%]; NI paid £4,657.62
• 2018/19 – Taxable £44,492.15; Class 1a NI due £4,328 [(£44,492 - £8,424) x 12%]; NI paid £4,794.05
Is this right?
0
Comments
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Is this right?
Almost certainly not.
National Insurance is calculated per pay day, unlike with income tax there is no annual calculation at the end of the year.
Unclear why HMRC didn't tell you this.
Or maybe there is something relevant you haven't told us about?0 -
if you are paid monthly you would calculate it monthly
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions
you need to check each pay period, not a total0 -
Do you really mean class 1A or class 1, the difference being class 1A is paid annually by employers on BIK and class 1 is paid by employees on a per pay packet basis which can lead to some differences on the whole year amount paid. Also taxable earnings may not be the same a gross earnings for NI purposes, for instance pension payments are tax deductible but are included for NI.0
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if you are paid monthly you would calculate it monthly
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions
you need to check each pay period, not a total
I've taken the numbers from my payslips into a spreadsheet and copied it below:
Month Gross EE Pension Childcare Taxable PAYE NI Net
Apr-17 4,666.67 -980.00 -124.00 3,562.67 -521.20 -378.65 2,662.82
May-17 4,666.67 -980.00 -124.00 3,562.67 -521.40 -378.65 2,662.62
Jun-17 4,666.67 -980.00 -124.00 3,562.67 -469.40 -378.65 2,714.62
Jul-17 9,453.00 -1,005.48 -124.00 8,323.52 -2,191.06 -474.23 5,658.23
Aug-17 4,788.00 -1,005.48 -124.00 3,658.52 -488.07 -380.93 2,789.52
Sep-17 4,788.00 -4,505.48 -124.00 158.52 876.33 -380.93 653.92
Oct-17 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
Nov-17 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
Dec-17 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
Jan-18 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
Feb-18 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
Mar-18 4,788.00 -1,005.48 -124.00 3,658.52 -523.20 -380.93 2,754.39
61,757.00 -15,489.32 -1,488.00 44,779.68 -6,454.00 -4,657.62 33,668.06
Does this make sense?
apologies for the formatting above - tried to insert some spaces but doesn't seem to have worked.0 -
Do you really mean class 1A or class 1, the difference being class 1A is paid annually by employers on BIK and class 1 is paid by employees on a per pay packet basis which can lead to some differences on the whole year amount paid. Also taxable earnings may not be the same a gross earnings for NI purposes, for instance pension payments are tax deductible but are included for NI.
Sorry, meant Class 1, not Class 1a.
Also my employer operates a salary sacrifice scheme, so think my pensions contributions dont count for NI?0 -
Taxable looks correct based on gross - pension - childcare, NI looks slightly low based on gross - childcare so I presume pension is not salary sacrifice. Tax code will likely explain the slight difference I get with monthly tax take. NI looks slightly low per month but it has been known for different packages to calculate it slightly differently, both methods being acceptable to HMRC.0
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Taxable looks correct based on gross - pension - childcare, NI looks slightly low based on gross - childcare so I presume pension is not salary sacrifice. Tax code will likely explain the slight difference I get with monthly tax take. NI looks slightly low per month but it has been known for different packages to calculate it slightly differently, both methods being acceptable to HMRC.
Just been in touch with our HR and it seems that it's only the standard employee/er % contributions that are salary sacrificed, and not AVCs, which sucks monkeyballs a bit.
This will explain my discrepancies I suspect when i recalculate on this basis.
Sad panda face.0
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