Task 7 - National Insurance Conts

cat3591

If you are given the amount of Class 1 contributions being paid by the individual, how do you calculate backwards to work out how much employer class 1 contributions will be paid? Thanks

Pian32

Split the tax into 12% and 2%

(Tax above 4956.96 will have been taxed at the 2% rate)

Divide the two taxes by their rate.

LR/0.12 = Tax on lower amount
HR/0.02 = Tax on higher amount

Add them together and add on the 0% amount. (If you are in the higher rate this can also be done as 50,000 + (amount taxed at higher rate))

Take off the employer 0% tax (Is currently slightly lower than employee)

Multiply by 13.8%

skandwm15

Hello, I've tried that for this question but my answer is way too high:

Albi's only employees are Bart & Sonny. Albi's Class 1 NI contributions in 2020/21 are £140 & £6,129 respectively.

Total employee class 1 NI contributions payable by Albi in 2020/21 : The correct answer is £2269

Please could someone explain how to get there?

douglasstroud

Is it because they claimed the £4k Employers N/I allowance?

skandwm15

Ah, I see what you mean. You are right, thank you.

I thought the amounts given were the employee NI and that I had to work it back to their salary to calculate the employers NI.

This is simpler.