How To Calculate Employers NI

[LisaContractorUmbrella]

Have you tried using one of the many calculators available on the web? They should give you a detailed breakdown of what taxes you are paying.

Umbrellas are confusing though, they seem to want to obfuscate the amount they are paying you for some reason. Don't trust any calculator on an umbrella's website.

Good luck!

I assume you mean that some umbrella's assume a level of expenses within the calculator regardless of whether or not the individual will be likely to claim them??

[Wary]

The employers NI rate above the secondary threshold is 13.8%
The threshold is £136 per week/ £589 per month/ £7072 per year.

So:-

g = gross amount (pay including er's NI)
s = salary

Then:-

(s-t) * .138 = ERNI
g = s + ERNI

We want to calculate ERNI from g, by substitution reduces to:-

erni = ((g-t) * .138) / 1.138

By example s = 336 (200 ni = 27.6). g = 363.60. From above:-

(363.6 - 136) = 227.6 * .138 = 31.4088 / 1.138 = 27.6

qed. But this is not valid for the case where s < t since erni always 0

As to how you derive g from your rate and the brolly charges that will depend upon your contract. But generally I would expect this to simply be your rate less their charge.

Thanks for that ASB. You explained that well ... and it does indeed reconcile to my payslip

[ASB]

Thanks for the link.

Yes, I did look at a couple of calculators & have looked at the umbrella one on your link. These all seem to be annualised whereas what I really want is one for a specific month only. i.e. I enter the income for the specific month, the specific deductions & the PAYE code, and hey presto it tells me my employers NI etc ...

Better still, I'd like to know what exactly the calculation is myself. When presented with a set of figures such as on a payslip, I always like to know how everything is drived and it bothers me if I can't understand or reconcile everything.

The employers NI rate above the secondary threshold is 13.8%
The threshold is £136 per week/ £589 per month/ £7072 per year.

So:-

g = gross amount (pay including er's NI)
s = salary

Then:-

(s-t) * .138 = ERNI
g = s + ERNI

We want to calculate ERNI from g, by substitution reduces to:-

erni = ((g-t) * .138) / 1.138

By example s = 336 (200 ni = 27.6). g = 363.60. From above:-

(363.6 - 136) = 227.6 * .138 = 31.4088 / 1.138 = 27.6

qed. But this is not valid for the case where s < t since erni always 0

As to how you derive g from your rate and the brolly charges that will depend upon your contract. But generally I would expect this to simply be your rate less their charge.

[Wary]

Have you tried using one of the many calculators available on the web? They should give you a detailed breakdown of what taxes you are paying.

Umbrellas are confusing though, they seem to want to obfuscate the amount they are paying you for some reason. Don't trust any calculator on an umbrella's website.

Thanks for the link.

Yes, I did look at a couple of calculators & have looked at the umbrella one on your link. These all seem to be annualised whereas what I really want is one for a specific month only. i.e. I enter the income for the specific month, the specific deductions & the PAYE code, and hey presto it tells me my employers NI etc ...

Better still, I'd like to know what exactly the calculation is myself. When presented with a set of figures such as on a payslip, I always like to know how everything is drived and it bothers me if I can't understand or reconcile everything.

[Wanderer]

Please can someone verify how to calculate Employers NI?

Have you tried using one of the many calculators available on the web? They should give you a detailed breakdown of what taxes you are paying.

Umbrellas are confusing though, they seem to want to obfuscate the amount they are paying you for some reason. Don't trust any calculator on an umbrella's website.

Good luck!

[Wary]

I'm with a brolly which means that all of my income will be treated a salary post deductions. Please can someone verify how to calculate Employers NI?

I believe the first step is to deduct all fees, expenses, pension contributions ...

I believe the rate is 13.8%. However, I don't think it is a case of taking 13.8% of the post-deductions amount, but rather performing a calculation so it works out to be 13.8% of the derived gross salary - correct? But I'm not sure that it's that simple either as I heard there is some £200 threshold although I'm not sure how to factor that in.

Any clarification would be appreciated.