Software developers calculate National Insurance Contributions (NICs). This is done with reference to HMRC specifications which may not always be accurate, as is the case with the recently-published NICs technical specifications for 2025/26, known by developers and HMRC as the EB5
An important concept when it comes to the calculation of the Contribution is the rounding rule contained in the Social Security (Contributions) Regulations 2001, Section 12 (1). This rounding rule does not follow the normal convention of rounding when decimals are more than two after the calculation has been performed. For example:
- A calculation of £50.156 will usually be rounding up to £50.16;
- A calculation of £50.155 will usually be rounding up to £50.16; but
- A calculation of £50.154 will usually be rounded down to £50.15
This is not the case with a NICs calculation as per 12 (1) which says that ‘any amount of a halfpenny or less shall be disregarded’. So, when performing a calculation in software or manually, it is the third decimal point that is important and whether or not this is above or below £0.005. So, using the above values:
- A NICs calculation of £50.156 will be rounded up to £50.16: but
- A NICs calculation of £50.155 and / or £50.154 will be rounded up down £50.15:
This rounding rule is an important concept, particularly as it diverges from the norm. So, it is admirable of HMRC to point this out, although not admirable to quote that the legislation is the Social Security (Contributions) Regulations 2001, Section (1)(b). This legislative reference does not exist and was removed by the Social Security (Contributions) (Amendment) (No. 2) Regulations 2016.
For Bookkeepers
If you are looking to quote the correct legislative reference for the NICs rounding rule, it is not as per HMRC’s guidance. There is no Section (1)(b) in the Social Security (Contributions) Regulations 2001.
As ICB have been saying on successive Wages Wednesdays, the above error is a prime example of why guidance from HMRC’s civil servants needs to be regarded as their interpretation. Just because HMRC have published it does not mean that it is correct.
The error has been pointed out to HMRC, though they still continue to replicate the error. The shame of all of this is that software developers may replicate the guidance in their products and / or training providers may quote this incorrect legislative reference.
ICB members now know the correct legislative reference. A small detail – maybe. An important one, nevertheless.
