Directors NIC

[clairewackrill]

Can someone tell me if there is a simple calculation for Directors NIC if they leave emloyment part way through a tax year?

[Hugo Fair]

I'm not sure what you will regard as a "simple calculation" ... but most of the information you require should be available at http://www.hmrc.gov.uk/paye/employees/c ... orship.htm - which:

a) explains that "directors' NICs are calculated on the basis of an annual earnings period, rather than the normal payment intervals (usually weekly or monthly) used for other employees";

b) provides a description of "The standard way of calculating directors' NICs" being to take the following steps each time you pay the director:
* add up the total earnings (including fees and bonuses) for the tax year so far
* calculate the NICs due on this amount
* deduct from this the total NICs the director has paid in the year so far
* you are left with the NICs now due for the current payment

It also provides a link to HMRC’s downloadable P11 Calculator.

Given that the whole purpose of directors' NICs is to operate the calculation on an annualised basis (akin to calculating Tax due on a 'cumulative' basis), there shouldn't be any impact if the Director "leaves emloyment part way through a tax year".

Hope this helps.

[Davidp]

It might also be worth mentioning that the annual earnings period (and the related thresholds etc) ARE abated if the directorship starts during the year - but NOT abated if the director resigns during the year.

This is confirmed in the CA44 Revenue book : "If the director resigns during the year, the earnings period does not change".

[IanHolloway]

Hi Claire,

Have you found the posts answered your question? As both David and Hugo have said, there is no apportionment of the annual earnings thresholds if the Director leaves in the tax year. Apportionment, or abatement, is only relevant when someone is appointed a Director mid-way through the tax year.

I hope that the posts have been helpful.

Kind regards,


Ian