Basic PAYE Tools - query with Employer [secondary] NIC calculation

Dear HMRC, I use Basic PAYE tools. All of my Payslips for the current Tax Year [24/25] , show NI letter : "A" . My monthly Salary is £1,048. And £1,048 shows on my payslips accordingly. The Employer [secondary] NIC deduction is £zero . How can this be, as the Secondary threshold for this Tax Year is £758 . Regards, Nigel Wilkes

Hi Nigel Hoare,
If you are a director which we are  assuming you are you can choose a non cummulative or cummulative calculation for NI.
If you are on the directors method which is cummulative then you will not pay NI until your income exceeds the yearly threshold.
Please see this guidance to provide details of the two methods. 
National Insurance for company directors
Thank you. 

 

Hi there HMRC Admin 25, I saw the above query because I have the same query. The person was querying the employer NIC deduction not the employee [or director deduction] and your response only speaks to the latter. Please can you clarify? My understanding is there is an employer contribution to make on salary above 9,100 but up to 12,570. Just like the query above I am finding that the employer secondary NIC deduction is zero when I am expecting to pay 479.00 for the year.

Hi ,
 

If you are referring to the 24/25 tax year then yes income reported over 9100 would be subject to employer NIC. Please contact us on 0300 200 3200 for us to look into your case. Thank you .

Hi Nigel Hoare Hoare & Founts123, Well, I know why it is happening. While processing the payroll in Basic PAYE Tools, you can find two options as below: Pay amount for Income Tax purposes: £ * Pay amount for NICs purposes: £ if different from pay amount for Income Tax purposes. Do not enter 0 (Zero) in Pay amount for NICs purposes, just leave as blank as it is. if you enter 0, then no NIC will be calculated for your amount whatever you mentioned in Income Tax purpose. Hope this will helps you.

Hello. I am having the same issue. I'm the sole Director of a limited company and have paid myself the first salary of 2025/26. The salary of 542 GBP should correspond to an employER NIC payment of 15% x (542 - 417). However, the HMRC PAYE Tool states no amount is due. I found this setting: - National Insurance calculation method for this director: Directors' cumulative method However, I understand it applies only to the employEE (Director) NICs. The pay amount for Income Tax and NICs purposes is the same and = 542 GBP. Are the employment NIC payments cumulative? Is there any setting I must change? Shall I just pay the 18.75 GBP calculated offline? Tnx!

Hi Stefano,
I am assuming you have downloaded and are using the latest version of Basic PAYE Tools.  
If not, you need to do so now and this should resolve your issue.
You are correct in stating Employer NIC should be due based on your salary, if it is a monthly pay period.  
Hopefully you have correctly entered your pay period as monthly.  
If you have entered a longer pay period, for example quarterly or annually, then no Employer NIC would be due.
If you have set up the tool correctly, then please contact our Online Service Helpdesk on 0300 200 3600.
Thank you.

Hello Admin20, Your assumptions were all correct. Therefore, I contacted the number 0300 200 3600. It seems a complex problem to solve. The Online Team passed me to the Employer Team, who, in turn, passed me to the NI Team. I then discussed the matter with two levels in the NI Team. After about 1hr 20', I was still on square zero: the HMRC PAYE Basic Tool and my HMRC Online Business account show nothing is due, while the online NICs calculator, which I think is correct, shows 18.75 GBP. To avoid penalties, I decided to pay the amount on accounts. I tried to set up a direct debit, but the reference number provided by the HMRC Online Business is longer than 14 characters, and the Direct Debit set-up dialogue box does not accept it. Eventually, paying directly from the bank was the payment method that would guarantee on-time payment without transaction fees. Now, if this is not dedication! ;-) Could you please confirm whether the "National Insurance calculation method for this director:" set in the HMRC PAYE Basic Tool applies only to the Director (as an employEE) or also to the employER? It's set as "Directors' cumulative method.". Thanks.

Hi,
Please accept  sincere apologies for the incorrect guidance given previously. 
If you have selected the Director's Cumultive, then there will be neither employee deductions nor employer contributions, until you exceed the relevant thresholds.  The cumulative method (which uses annual thresholds) applies to both the employee and the employer.
The employer threshold for the current tax year is £5,000.  
Therefore, the employer will not have any contributions to make until the employee's salary in the year exceeds £5,000.  For the employee, the threshold is £12,570 and no deductions of National Insurance will be due until that figure is exceeded.
Thank you.