• Aimée Lister

How to calculate Employer's National Insurance: Employer’s NI Calculator 2022

Updated: May 13


With all the changes that have been made to National Insurance contributions for this tax year, you’re not alone if you’re struggling to discern how exactly your employer NI liability has changed and what you need to pay. Don’t worry, we’ve got you covered.


This quick guide walks you through the fundamentals of calculating employer National Insurance in 2022 and our employer NI calculator takes the stress out of working out your contributions for this year. Plus, with the Zelt app, our commitment to workplace transparency means that not only are payroll changes implemented automatically but that your employees know exactly what’s happening and why.


Changes in NI 2022


As we outlined in our blog ‘What you need to know about the National Insurance Hike 2022’, there have been some substantial changes to NI contributions for this tax year 22/23.


Briefly, from April 6, contributions increased by 1.25%, as did the contribution threshold (from £9,568 to £9,880). The income threshold will see a further rise in July to £12,570. These measures will last for one year and apply to both employees and employers.


From April 2023, this increase will persist but in the form of a Health & Social Care levy. NI contributions are set to return to their previous rate.


What do employers need to know about employer NI?


In this section, we’ll go over the basics of employer’s NI contributions.


National Insurance categories


There are 8 broad employee National Insurance categories:

National Insurance Categories

Employee Group

A

Category A covers all employees except those in categories B, C, H, J, M, V and Z. Most employees fall under category A

B

Married and widowed women who are eligible for reduced NI contributions

C

Employees who are over the State Pension age

H

Apprentices under the age of 25

J

Employees who are paying their NI contributions through another job

M

Employees under the age of 21

V

Army Veterans in their first employment

Z

Employees under the age of 21 who are also paying their NI contributions through another job

Source: https://www.gov.uk/national-insurance-rates-letters/category-letters


Employer’s Class 1 National Insurance Contributions


Employers pay class 1 NI contributions on any employee earnings that exceed, for most employees, the secondary threshold (ST). For 2022 to 2023, the ST is £175 per week and £758/month, increasing to £1,048 per month from August 2022. The rate of contribution for this tax year is 15.05%.


If you have employees under the age of 21 or eligible apprentices under 25 , you only start paying class 1 NI contributions above the Upper Secondary Threshold which is £967 per week and £4,189 per month.


How to calculate employer National Insurance contributions


Calculating employer NI is straightforward: employers pay 0% on income below a certain threshold and 15.05% above that threshold.

 

Employer NI = NI contribution rate x Income above threshold

 

For most NI classes (A, B, C and J) this threshold is the Secondary Threshold, which is changing twice this tax year. Certain young employees (H, M) and veterans (V) the income threshold is the much higher Upper Earnings Limit.


Multiply any earnings above the threshold by the NI contribution rate, shown in the table below, to get the employer National Insurance you need to pay for an employee.

NI category

Earnings up to secondary threshold (ST)

Earnings between ST and upper earnings limit (UEL)

Earnings above (UEL)

A (default)

o%

15.05%

15.05%

B,C,J

o%

15.05%

15.05%

H (apprentice under 25)

M (under 21)

V (Veteran)

o%

o%

15.05%

Source: gov.uk


Examples of employer NI contributions for different annual salaries


You can see examples below for salaries ranging between £30,000 and £50,000 per year, but you can also try using this UK employer NIC calculator.

​Annual Salary

Employer NI

Employee NI

£30,000

£262

£192

£35,000

£325

£248

£40,000

£388

£303

£45,000

£450

£358

£50,0000

£513

£413

£55,000

£576

£429

£60,000

£638

£443

£65,000

£701

£456

£70,000

£764

£470

£75,000

£827

£483

£80,000

£889

£497


Employee benefits and in some cases expenses are also subject to National Insurance


So far so good. But there are a few more things you need to take into considerations in order to account for other income subject to National Insurance, such as benefits and some expenses. There are also more things to considers for directors and PAYE settlement agreements.


Employers Class 1A NI contributions on employee expenses and benefits


National Insurance is also payable on any employee benefits or expenses. Employers must report and pay this particular NI liability at the end of the tax year.


You must pay NI on benefits such as work phones, accommodation, and bonuses. Note that every expense and benefit is calculated differently, so you need to check on what you’re required to report and pay.


You will need to complete a P11D form for every employee that you have given benefits or expenses to and return it to HMRC. It is possible to deduct and pay class 1A NI through your payroll as long as you remember to register with HMRC before the beginning of the tax year.


NI Contributions for Directors of Limited Companies


Company directors count as employees and therefore are required to pay NI contributions on any income over £9,880. Your NI liability is calculated from annual earnings but is paid in accordance with your payroll schedule.


Even if you’re the only employee of your company and you’re the director, your company will still need to pay employers NI on your salary.


Class 1B NI - PAYE Settlement Agreement (PSA)


A PSA allows employers to make a single payment per year that covers any tax and National Insurance contributions that are due on ‘minor, irregular or impracticable’ employee expenses or benefits. These are known as Class 1B National Insurance contributions. Benefits that are covered include long service incentives, telephone bills, relocation expenses, and shared cars.


2023 & The Social Care and Health Levy


Looking ahead, employers need to ensure their payroll software will automatically reflect the introduction of the new Social Care and Health Levy in April 2023. Your payslips will need to include the levy as a separate item. In addition, the levy will also be paid by employees that are over the State Pension age.


How much to deduct from employees’ pay?


As an employer, you are responsible for automatically deducting your employees’ NI contributions from their pay. The new rates for 22/23 are reflected in this table:

Category Letter

up to £823

£1,048 to £4,189

Over £4,189

A, F, H, M, V

0%

13.25%

3.25%

B, I

0%

7.1%

3.25%

J, L, Z

0%

3.25%

3.25%

Source: https://www.gov.uk/national-insurance-rates-letters


Employers also need to ensure that they’re aware of HMRC’s request with regard to payslips: Employers (where appropriate) should include a message that states ‘1.25% uplift in NICS, funds NHS, health & social care’ to clarify to their employees exactly why their contributions (and therefore deductions) have increased.



Final Thoughts


Once you wrap your head around it, the National Insurance hike, though costly, is straightforward. That being said, with the income thresholds changing again in July, you don’t want to be adjusting your payroll manually. Your enterprise software should be unified and automated, implementing these changes seamlessly. Not only should these changes in NI be reflected automatically, but you should be able to communicate directly with your employees in order to explain and contextualize any changes they see on their payslips. Finally, you may want to explore methods of reducing your NI bill that might benefit both you and your employees.


FAQs about Employer National Insurance

Do employers pay National Insurance in the UK?


Yes, they do. Employers deduct their employees’ National Insurance contributions and pay on their behalf. In addition, employers pay an additional National Insurance contribution on their employees’ earnings above the relevant threshold.


How much NI does an employer pay in the UK?


It depends on the size of your business and the National Insurance category of your employees. As we’ve seen, for the tax year 22/23, employers need to pay a 15.05% contribution on any employee earnings exceeding the secondary threshold, which is £175/week or £758/month.


Do employers pay NI for employees in the U.K.?


U.K. employers are required to deduct their employees’ national insurance contributions as well as paying their own contributions ‘employer national insurance’ on their employees’ earnings.