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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1: calculating & recording earnings, NICs & NIC rebates: adapting the tables for NICs due for pay intervals other than weekly or monthly

General

An employer who pays their employees other than weekly or monthly can, if they wish, adapt the NI Tables to fit the earnings period, unless the intervals between payments are more than a week but not multiples of weeks or months. In that event, they must use the exact percentage method to calculate the NICs due - see NIM11007 onwards

Multiples of a week or a month

To convert the earnings paid in the pay interval to an average weekly or monthly amount, the employer:

  • divides the payment by the number of weeks or months in the earnings period;
  • looks up the NICs due on the ‘average’ pay figure in the weekly or monthly table; and
  • multiplies the answer from (2) by the number of weeks or months in the pay interval to get the NICs due for the whole earnings period.

Less than a week

The employer adds up all payments made during the tax week and calculates the NICs on the aggregate amount using the weekly tables.

Separate jobs with same employer

If the employee has two or more jobs at the same time with the same employer, the employer adds all the payments together to calculate the NICs due. If this is not practicable, for example because earnings are worked out at different pay points using a computerised payroll system which is unable to perform the calculation, the employer:

  • treats them separately; and
  • calculates the NICs on each set of earnings.

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Other pay intervals

If the pay interval is more than a week, but not a multiple of a week or a month, the employer cannot use the NI Tables to calculate NICs. The employer must use the exact percentage method - see NIM11007 onwards.

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Four weekly pay period when employees pay over the annual maximum in a single employment

When the employee’s pay period is four weekly and the first payday falls on 6 April, 14 paydays will occur in the tax year and NICs could be paid over the prescribed annual maximum for the tax year.

Since the annual maximum is only relevant where the employee is paying NICs in two or more employments in the same tax year, regulations do not allow the Department to make a refund under these circumstances. Legal advice has confirmed this and it should be borne in mind that:

  • the incidence will be rare, only occurring every 24 years;
  • there is a notional liability for primary Class 1 NICs on every payment of earnings once the employee’s earnings reach the LEL and actual payment of such contributions if the earnings exceed the Primary Threshold;
  • on current NICs levels, the amounts involved are small; and
  • the employee may gain benefit entitlement from the payments.