Employer Further Guide to PAYE and NICs - HM Revenue & Customs

If Method B was used to work out NICs on the holiday
pay, and:
• if payment is actually made in the week in which it
was due to be made treat it separately from the holiday
pay due for that week and work out NICs on it in the
normal way
• if payment is made at a later date for example, when
the employee returns to work, add it to the payment due
for that period and work out NICs on the total.
Examples
These examples are based on 2012–13 contribution
rates and limits for an employee paying NICs under
contribution Table letter A. NICs are worked out using
the exact percentage method.
On 2 November the employee is paid £
Basic wages for working 29 October
– 2 November
205
plus holiday pay for 3 – 9 November 155
plus holiday pay for 10 – 16 November 155
Total 515
On 23 November the employee is paid
basic wages for working 19 – 23 November £205
The employee worked overtime during the week
29 October – 2 November and was due to receive
the overtime payment of £80 on 9 November.
Example 1 Method A
Based on the employee being paid the overtime
payment on 23 November
On payday of 2 November NICs are due
Earnings Total
contribution
£205 (wages)
£155 (holiday pay)
£155 (holiday pay)
Total
£
15.50
2.60
2.60
20.70
Employee’s
contribution
£
7.08
1.08
1.08
9.24
On 23 November the employee is paid the overtime of
£80. As the employee was due to receive this on
9 November, the £80 has to be added to the holiday
pay for the week 3 – 9 November and NICs worked
out again.
Earnings Total
contribution
£205 (wages)
£155 (holiday pay)
+ £80 (overtime)
£235
£155 (holiday pay)
Total
£
15.50
23.24
2.60
41.34
Employee’s
contribution
£
7.08
10.68
1.08
18.84
On the payday of 23 November, as the overtime
payment has already been accounted for, NICs are only
due on the wages for that week as follows
Earnings Total
contribution
£
£205 (wages) 15.50
Employee’s
contribution
£
7.08
25 Chapter 2 CWG2(2012)