National Insurance Calculator

Category: Other Finance
- January 14, 2025
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Employer Details

Total number of employees
Previous tax year's Class 1 NICs liability

Employee Salary Bands

Secondary Threshold (ST) from April 2025
Enter average annual salary: £
Enter average annual salary: £

National Insurance Contributions (NICs) Formula

NICs are calculated as: \( \text{NICs Liability} = \text{Eligible Payroll} \times \text{NIC Rate} \)

From April 2025: \( \text{NIC Rate} = 15\% \), and Secondary Threshold = £5,000/year.

What are National Insurance Contributions (NICs)?

National Insurance Contributions (NICs) are payments made by employers and employees in the UK to fund state benefits like pensions, healthcare, and unemployment benefits. Employers must pay Secondary Class 1 NICs for each employee earning above the Secondary Threshold.

How This NIC Calculator Helps

The NIC Calculator simplifies the calculation of your company’s annual NICs liability. It considers:

  • The number of employees in different salary bands
  • Changes in NIC rates and thresholds effective from April 2025
  • Employment Allowance for eligible businesses

With this tool, you can plan your payroll and understand the financial impact of NIC changes on your organization.

How to Use the Calculator

  1. Enter the number of employees: Input the total number of employees in your organization.
  2. Provide salary band details: Categorize employees into salary bands and enter average salaries where applicable.
  3. View results: Click "Calculate NICs" to see your estimated NICs liability for the current and future systems.

Key Features

  • Pre- and Post-April 2025 NIC Rates: Compare your NICs liability under the current and upcoming rates.
  • Employment Allowance Calculation: Includes annual reductions for eligible businesses.
  • Impact Analysis: Visualize your payroll distribution and NIC changes using interactive charts.

Frequently Asked Questions

What is the Secondary Threshold?

The Secondary Threshold is the salary level above which employers start paying NICs. From April 2025, this threshold will reduce to £5,000/year.

What is the Employment Allowance?

The Employment Allowance reduces NICs liability for eligible businesses. It will increase from £5,000 to £10,500 starting April 2025.

How can this calculator help with financial planning?

This tool allows you to anticipate payroll costs, adapt to NIC rate changes, and assess the benefits of Employment Allowance, ensuring better budget management.

What is the difference between the current and new NIC systems?

The new system includes a higher NIC rate (15%) and a lower Secondary Threshold (£5,000), increasing employer liabilities but providing greater Employment Allowance.