Director's National Insurance

The way in which Directors are assessed for National Insurance Contributions (NIC) is different to that of general employees. Earnings are assessed on a cumulative ‘Year to Date’ basis meaning that no NIC is deducted from pay until the Primary Threshold of £9,500.00 is reached. Earnings above £9,500.00 are then assessed for NIC contributions at a rate of 12% for the Director and 13.8% for the Employer.

If your payslip looks different this month with your net pay changing, that is becuase this tax month you have reached the Primary Threshold and therefore NIC is payable at the above rates.

The implication of this is that you will now need to pay the NIC liability amount to HMRC each month, until the end of the Tax Year. Please do not forget to make these monthly payments.

From the start of the new tax year (in April ) the threshold will be reset and liablity will not be due again until the threshold is reached once again later in the tax year.