Employee National Insurance (NIC)

Employee national insurance (NIC) is payable by your staff and it is your company’s responsibility as the employer to deduct your employee’s national insurance contribution from your staff salaries. Then, pay them over to HM Revenue and Customs.

For example, a staff under employment contract, you wold require to deduct Class 1 employee’s national insurance contribution from their pay. Whereas, for people working for your business as a freelancer or independent consultant, you pay them when they invoice your business. In that case you are not require to put these people in your payroll system. Thus no need to deduct any employee national insurance off their payments.

The UK national insurance contribution is administered by National Insurance Contributions Office (NICO).

National Insurance Number

Your staff must provide you, as their employer, with his/her national insurance number, if your staff does not have a national insurance number he/she should apply to their local Jobcentre Plus Office for one.

If your employee has a national insurance number but it has been lost then the person should contact HMRC.

National Insurance Contribution (NIC) Rates

HM Revenue and Customs published national insurance contribution rates and thresholds on the gov.uk website.

Other Deductions

Employers are also required to deduct income tax from your staff salaries
under the Pay As You Earn (PAYE) Scheme and pay it over to HMRC together with the employee’s and employer’s national insurance contributions.

Outsource payroll processing to your accountants

Working out income tax and national insurance contributions can be burdensome and time consuming process with the pension contribution as well. It is normally more efficient to ask your accountants to handle your payroll processing and you focus on your business.

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