National Insurance calculation methods

National Insurance calculation methods

You can calculate National Insurance contributions (NICs) yourself by using either the HM Revenue & Customs (HMRC) National Insurance tables or the .

National Insurance tables

If you use the HMRC National Insurance tables, you can obtain the current tables in the employer’s pack. You can register as an employer online on the HMRC website – Opens in a new window, or by calling the HMRC New Employer Helpline on Tel 0845 60 70 143.

If you’re already registered as an employer, you can request another pack by calling the HMRC Employer Helpline on Tel 08457 143 143.

The National Insurance tables are easy to use, provided that you use them correctly. There are , eg A, B, C, D, E, F and G, according to whether your employees are:

  • in a pension scheme which is contracted into, or out of, the state pension scheme
  • your employee is aged over state retirement age
  • classified as a special case, eg women who are entitled to pay a reduced rate of Class 1 NICs

Exact percentage method

If you choose to use the exact percentage method, you must base calculations on your employee’s gross pay. You then multiply the amount they earn over the primary threshold by the appropriate percentage rates. This method is explained in full in the HMRC employer’s guide. Download the employer further guide to PAYE and NICs from the HMRC website (PDF) – Opens in a new window.

It’s worth noting that Class 1 NICs are calculated differently for directors. You need to use their cumulative, rather than their monthly, earnings.

Download a guide to PAYE and NICs rates and limits for 2008/09 from the HMRC website (PDF) – Opens in a new window.

Many employers choose to outsource their payroll to a specialist. Read our guide on choosing a payroll system.

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