From 6 April 2016 the amount of National Insurance contributions will increase for employees who are members of the NHS Pension Scheme. 

Currently, employers pay a lower ‘contracted out’ rate of employer’s National Insurance contributions for staff who are members of the NHS Pension Scheme but this will change from 6 April 2016 and you will need to pay the full employer rate, which is generally 13.8%. This will increase the payroll cost for most practices.

What can employers expect?

Employers will pay additional NI costs of 3.4% on earnings between the Lower Earnings Limit (LEL) and the Upper Accrual Point (UAP). 
Based on 2016/17 tax bands, this could be as much as £1,000 per employee, per year of an increase.

Member gross salary                                   Increase in employer NI

£15,000 p.a.                                                   £234 p.a.
£25,000 p.a.                                                   £574 p.a.
£35,000 p.a.                                                   £914 p.a.
£40,000 p.a. and above                                 £1,084 p.a.

What can employees expect?

Reduction in member take-home pay can be expected with  an increase in NI contributions of 1.4% of earnings between the LEL and the UAP.

Member gross salary                                  Increase in employee NI

£15,000 p.a.                                                  £97 p.a.
£25,000 p.a.                                                  £237 p.a.
£35,000 p.a.                                                  £377 p.a.
£40,000 p.a. and above                              £447 p.a

Click here to access a NHS information leaflet with some more information which you may find useful.

If you have any queries on the above then please do not hesitate to contact Louise Peters or your regular Johnston Carmichael Adviser.

Louise Peters
Partner
Medical and Healthcare Team