National Insurance is weekly or monthly but not yearly

My client took a new employee who had worked for two months with another employer before joining him.


My client will employ this individual for a couple of months paying say £1000 per month.

After taking the last employer’s pay and current projected pay this individual’s earning was below Personal Allowance limit of £10,600 (Tax year 2015 -2016)


When I ran the payroll , HMRC Basic PAYE tool asked me to deduct Class 1 National Insurance from this employee’s pay.


I was confused as I calculated that this employee’s total pay in the whole tax year will be less than Primary Threshold of £672 x 12 = £8,064


I had been calculating National Insurance contribution like Income Tax and taking the National insurance thresholds to be same as Income Tax Threshold.


I researched and once again Chartered Institute of Tax Advisor’s(CIOT) website came to rescue. It informed me that national insurance thresholds are calculated on a weekly or monthly basis (depending on the payment cycle) unlike Income Tax where thresholds are calculated on a yearly basis.


Example of Hypothetical Emily was most illuminating. Visit the below mentioned page and

Ctrl + F “Emily” to find the example.


Link to the article :


Thank you CIOT

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s