Employers National Insurance When Employing Staff

If you’re looking to employ staff for the first time then one very common area business owners forget to account for is the amount of ‘Employers National Insurance’ you’ll need to pay for each member of staff. So in this article we’re just going to explain what this is and how much it’ll cost your business for each employee.


What is Employers National Insurance?

This is quite simply a mandatory contribution that all businesses must pay on top of each member of staff’s salary and is paid via the PAYE scheme. There are only two types of employee which you do not have to pay Employers National Insurance for:

Any employee under the age of 21 who earns between the secondary threshold of £162 and £892 per week.

Any employee who is an apprentice under the age of 25 who earns up to the secondary threshold of £892 per week.

Apart from those two exceptions you will have to pay Employers National Insurance contributions for each member of staff.


How Much is Employers National Insurance?

The standard rate of Employer’s Class 1 National Insurance is 13.8% which is paid on ALL earnings (including bonuses) for each employee earning above the the secondary threshold of £162 per week.


How to Calculate Employers National Insurance

The main thing to remember whenever looking to calculate how much you’ll need to pay for each employee is that the threshold of £162 per week automatically deducts from the employee’s overall income, which equates to £8,424 per year.

So as an example let’s take an employee on a £30,000 yearly salary. The method of calculating how much Employers National Insurance you’ll pay for this member of staff follows four simple steps:

  1. Employee Taxable Income = £30,000 (No bonuses)
  2. Minus National Insurance Contributions Threshold = – £8,424
  3. Earnings Subject to Employer National Insurance = £21,576
  4. Employers National Insurance Due (13.8%) = £2,977.49

So as you can see this form of contribution can be quite costly if you forget to account for it in the overall cost of each staff member! So it’s always worth remembering that you need to pay Employers National Insurance if you are ever employing staff.