Gross Pay and Employer’s National Insurance Contributions

The cost of employing someone in your business obviously includes their basic wage or salary.  It may also include various bonuses and enhancements, such as double-time for working on a Sunday or bank holiday or an attendance allowance to discourage absence through sickness.  All of these items add up to the employee’s gross pay.

On top of the employee’s gross pay, an employer can expect to pay employers national insurance contributions (NICs) (of 12.8% for 2007/8), on the gross pay in excess of what is termed the “earnings threshold” (which is £5,200 per annum for 2007/08).

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