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NI calculation problem?
I don't think that the Set Up Payroll option in Freeagent is calculating my NICs correctly...
With a tax code of 603L and gross salary of £6000 it is correctly showing no income tax due under PAYE (salary is under the new Personal Allowance figure of £6035). However it is also showing no NICs due which I think is incorrect - there should be a small amount of employee's and employer's NI due as it is still above the NI Earnings Threshold (~£5460).
Any ideas? Maybe the Personal Allowance figure is being used in the calculation instead of the NI Earnings Threshold. Or have I got something set up wrong?
With a tax code of 603L and gross salary of £6000 it is correctly showing no income tax due under PAYE (salary is under the new Personal Allowance figure of £6035). However it is also showing no NICs due which I think is incorrect - there should be a small amount of employee's and employer's NI due as it is still above the NI Earnings Threshold (~£5460).
Any ideas? Maybe the Personal Allowance figure is being used in the calculation instead of the NI Earnings Threshold. Or have I got something set up wrong?
I’m confused
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Inappropriate?Daniel,
We've just reviewed our payroll code and you're right - we have been using the taxable gross pay modified by the tax code to calculate NI. Obviously this wasn't a problem before.
Thanks loads for bringing this to our attention. We'll introduce a fix just as soon as we can and update you when it's been done.
Sorry for the inconvenience in the meantime.
I’m confident we can fix this fast
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Inappropriate?No problem, thanks for the quick response - seems you're working as late as me :) Loving the system so far.
I’m a happy soon-to-be-customer
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Inappropriate?Don't forget that if you were previously paying yourself £5460 per year there is NO benefit increasing your salary to £6000. It will actually COST you money because the extra NI will be more than the tax saved! -
Inappropriate?Daniel,
We've been looking again at this, with the aim of fixing any problems prior to tonight's software update 'Sancerre'.
We're increasingly convinced we're actually doing this right. Are you sure none of your payslips have any Employer or Employee NI on them?
Don't forget if you choose 'Director NI' the NICs aren't deducted until your earnings to date reach the threshold, whereas 'Employee NICs' are distributed evenly throughout the year.
The totals should be the same though: (6000-5435) * 11% = £62.15 employee NI and (6000-5435) * 12.8% = £72.32 employer NI (there may be a few pennies difference due to rounding across the year)
If you still have questions, I'd appreciate it if you could email me: ed at freeagentcentral dot com - and we'll chat through it.
I’m fairly confident
1 person says
this solves the problem
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Inappropriate?Hi Ed,
I have regenerated my payslips everything looks OK now. Not sure what happened before, I think I may have upset things by running 'Set up payroll' a number of times to try and handle my tax code change in September.
That said, the tax code change does seem to get handled correctly now anyway, so problem solved :)
Thanks again,
Dan
I’m happy
EMPLOYEE
