Ian Holloway considers National Insurance contributions calculations when a new employee starting after payroll cut-off is paid backpay with the following period’s total salary.
It is a reality for payroll departments that, sometimes, they are not always advised of a new starter until after payroll cut-off. Operationally (and depending on the values involved), they will pay the amount due but not paid as backpay in the following pay period, together with the employee’s regular salary.
‘Mistimed’ payments
HMRC and legislation refer to this as making a mistimed payment, changing the way National Insurance contributions (NICs) are calculated:
Example 1: Pay subject to NICs
An employee starts on 9 September on a salary of £24,000, paid monthly. Payroll is not advised
