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directors online calculator

  • Payroll Agent
  • 15 posts
  • # 116621

Can anyone explain how you use the HMRC online calculator to work out a directors National insurance.Need to find out on the calculator what month a director starts to pay national insurance and what his employers NIC will be in September this is from the 2016/17 payroll exam.

  • Member PM.Dip
  • Practice Licence
  • 29 posts
  • # 116720

Hi Lynn

You would need to calculate the NIC payment manually as the online calculators are now set up for 2018-19 and will give incorrect results.

To do this calculate how much their pay is monthly.

They will not start to pay NICs until they have reached the Primary Threshold (for 2016-17 this was £8060.00).

Once they have reached this threshold take the £8060.00 off of the total they will have been paid and the NICs will be 12% of the remainder.

To calculate the NICs due in September you need to calculate how much NICs they were due in August and deduct this from the total amount that would be due in September. As per the following:

Assuming a mothly salary of £2000.00

Month 1 (April) - total salary = £2000.00 No NICS due

Month 2 (May) - total salary = £4000.00 No NICS due

Month 3 (June) - total salary = £6000.00 No NICS due

Month 4 (July) - total salary = £8000.00 No NICS due

Month 5 (August) - total salary = £10000.00 NICs due = (£10000.00-£8060.00) x 12% = £232.80

[Employers NICs = (£10000.00-£8060.00) x 13.8% = £267.72]

Month 6 (September) - total salary = £12000.00 Total NICS due = (£12000.00-£8060.00) x 12% = £472.80.

NICS due for month = £472.80 - £232.80 = £240.00

[Emplyers NICs = (£12000.00-£8060.00) x 13.8% = £543.72. NICS due for month = £543.72 - £267.72 = £276.00]

Hope this helps.

Kind regards

Gordon


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