NIM08310 - Earnings Periods: Employee starts work part way through an earnings period but is not paid until the end of the next earnings period: Earnings period in same tax year

Regulation 7(1)(a) & (2)(a) of the Social Security (Contributions) Regulations 2001聽(SSCR 2001)聽(SI 2001 No 1004)

When聽an employee starts work on a monthly earnings period basis part-way through the first earnings period (June) but receives their first earnings payment, for a part-month and a full month, at the end of the next earnings period (July) NICs are calculated on the earnings due for each earnings period separately.

Example calculation:

  • an employee starts work on 21聽June 2025聽
  • the employee will have a monthly earnings period (earnings will be paid on the last day of each calendar month)
  • the employee is liable to pay standard rate catergory A NICs
  • it is too late for the employer to put the employee on to the payroll for June so the employee receives their first earnings payment, for the period 21聽June to 31 July, on 31 July 2025.

The employee鈥檚 gross pay is 拢2,700聽which represents:

  • 拢700聽for the period 21聽to 30 June
  • 拢2000聽for the period 1 to 31 July

Calculate NICs separately on each of these amounts as follows:

The monthly thresholds for 2025 to 2026 tax year are:聽

  • Secondary Threshold (ST) of 拢417
  • Lower Earnings Limit (LEL) of 拢542
  • Primary Threshold (PT) of 拢1,048
  • Upper Earnings Limit (UEL)聽of 拢4,189

As the earnings payment for June is聽拢700 and聽this is less than the PT no primary NICs are due. However, as the payment is above the ST secondary NICs are due:

Employer NICs = (拢700 - 拢417 (ST)聽= 拢283) x 15% = 拢42.45

Total NICs for June payment = 拢42.45

Earnings payment for July = 拢2,000

Employee NICs = (拢2,000 - 拢1048 (PT) = 拢952) x 8% = 拢76.16

Employer NICs = (拢2,000 - 拢417聽(ST) = 拢1,583) x 15% = 拢237.45

Total NICs for July payment = 拢313.61聽

Total NICs of 拢356.06 are, therefore, due on the earnings payment of 拢2,700.

The principle also applies to weekly paid employees.