This article explains how to verify NI calculations  made by Payroll.

You don’t normally need to do this, although you may wish to do so to satisfy yourself with the system’s accuracy.

There are two ways of manually calculating national insurance (NI):

• Table method

It's the easiest method, and involves looking up the employee's pay in the appropriate HMRC manual.

• Exact percentage method

This is the method used by Sage Payroll software. This is an alternative method of calculating NI. It uses the earnings limits and NI rates tables. You can find these rates on HMRC's website.

There may be a discrepancy between the table method and the exact percentage method. The tables round values down to the nearest pound. HMRC is happy with either method.

Prerequisites >

Before you can check an NI calculation, you’ll need the following information:

Item	Reason you need it	How to get it
Pay Cycle	The frequency that the employee gets paid. Available options are: Weekly 2-weekly 4-weekly Monthly These determine the NI thresholds to use for their calculations.	Select the Employees tab. Select the relevant employee. The pay cycle is in the Employment Details section.
NI Category	This determines the NI rate(s) that apply to the employee’s NI calculations.	Select the Employees tab. Select the relevant employee. The NI category is in the Current Tax Details section.
Date of Birth	Under 16's are not subject to NI. If over the State retirement age, they should be on NI category C. They are not subject to NI deductions from their pay. The employer must still pay NI on their behalf.	Select the Employees tab. Select the relevant employee. The date of birth is in the Personal Details section.
NI-able Gross Pay	The amount of the employee’s pay subject to NI. Don't include gross deductions or business expenses in the calculation.	If you haven’t yet completed the pay run: Select the Pay Runs tab and then Process Pay Run. Select Next, and Next. Check which payments are subject to NI. If you’ve already completed the pay run: Select the Pay Runs tab. Select the relevant pay period. Select View the detailed report. Check which payments are subject to NI.  NOTE: When calculating payments subject to NI, check the gross payments. Include statutory payments. Deduct any gross deductions or business expenses.

Check your calculations with HMRC. Work out employee's National Insurance contributions (opens in new tab).

Find out more about NI thresholds and employee and employer contributions.

Read the HMRC website article National Insurance: Introduction (open in new tab).

Also read our Sage article, Legislation for the 24/25 tax year (opens in new tab).

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