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• # 115346
• Wed 19 Jul 2017 07:43 PM

1)  A director earns £2000Per month and has elected to pay their national insurance using the cumulative director method. in which tax month in 2015/16 tax year will the first national insurance take place answer is 5 but not sure how they get the answer to question 2 which is

2)  Assuming there are no other employees and the business is entitled to the employment allowance,what will be the total employer NI cost for the 2015/16 tax year rounding down to the nearest £1 Please can someone explain how to get the answer and also what is an employment allowance that they are entitled to. 

• lynn davies

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• # 115430
• Mon 31 Jul 2017 01:00 PM

Hi Lynn

Employment allowance is an allowance of up to £3000 per year that employers can claim as relief on class 1 National Insurance. If you are using payroll  software, you need to either tick or put yes in the Employment Allowance Indicator box and the software will reduce the amount payable to HMRC accordingly until the £3000 is used up.

 You will be able to see how much N.I has been saved by running an end of year report from your software.

hope that helps

CAP

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