NI Contributions on a Bonus

[San100]

An employee with an annual salary of less than £30k has received a Bonus of £10k in their Jan payslip.

I assumed that the £10k would attract £800 NI Contributions in the Jan payroll. The accountant however says I'm wrong. They say "NI is assessed based on earnings within the pay period and the applicable thresholds set by HMRC" and have calculated some of the NI at 8% and some at 2%.

I don't understand this because at year end, their annual salary plus the bonus will total less than £40k so surely the NI deduction should all be 8% ?

Can anyone help me understand, please ? Thanks.

 

[Ziggy2024]

Your accountant is correct. NIC is based on the pay period, the annual pay is irrelevant for NIC.

Any earnings over the relevant threshold will be at the lower rate of NIC.

If you went over the NIC threshold in one month but dropped in the next month you don't receive a refund of the NIC deducted.

 

[San100]

Your accountant is correct. NIC is based on the pay period, the annual pay is irrelevant for NIC.

Any earnings over the relevant threshold will be at the lower rate of NIC.

If you went over the NIC threshold in one month but dropped in the next month you don't receive a refund of the NIC deducted.

Thank you so much for the explanation, Ziggy2024.

 

[MyAccountantOnline]

.... NIC is based on the pay period, the annual pay is irrelevant for NIC.

....

Unless you are a company director.

 

[San100]

Unless you are a company director.

Thank you !