Are there any accountants around?

[MagratGarlik]

Hi, this is probably a really simple question (I hope so, but I'm not sure I'm understand the HMRC website properly). However, I'm currently sorting out a contract for a new employee. Obviously I need to make sure that the amount she is offered is not so high that I'm out of pocket with respect to holiday pay, sickness pay and employers national insurance contributions.

I've worked out holiday pay and sickness pay, so that's all fine, but I'm unsure about my level of liability for employers NI contributions. If I read the info correctly, I have to pay "secondary" class 1 contributions on their earnings, which is 13.8%, if their earnings are over £148 per week. Is that correct? So, if the employee (who will be doing the role part-time as a secondary job) is earning less than £148 per week from me, I would not have to pay employer's NI? But if she earns over, I only pay employer's NI on the amount she earns over that, not on the first £148??????

Sooooo confused!
Thanks for any help!

Yes, that's how it is. If she earns £149 a week you will have to pay 14p [(149-148) x 13.8%]
If she earns £158 per week you'll have to pay £1.38 [(158-148) x 13.8%]. I hope that makes sense, it's essentially two example calculations to reassure you that what you've already written is correct.

Employers NIC are your costs coming out of your pocket. You also have to pay employees NIC and PAYE to HMRC but those are deducted from your employee's gross salary so technically they are not a separate expense for you.

Thanks.

I probably wasn't very clear with the comment about being out of pocket. What I meant was that I need to ensure the additional turn-over generated from employing her is high enough that I don't end up worse off as a result of employing her (if that makes sense!). Obviously it doesn't affect the amount she sees from her wages because it's my cost, but it will affect the amount charged to clients to ensure that covers her wages, holiday pay etc.

Sorry, I did understand what you meant. I just thought I'd mention the other type of NI you have to pay over to HMRC and that this one gets deducted from your employee's gross wages. I thought I'd clarify a point that confuses some small employers and instead managed to confuse you. Sorry!

There is now a £2k allowance whereby you don't pay the first £2k of employers NI each year.

This link should help:

www.gov.uk/employment-allowance-up-to-2000-off-your-class-1-nics

excellent, thanks.