For updates affecting this Division please see Part E0 Updates
E8.1101 NIC planning possibilities
The aim of this division is to indicate the main areas where planning is possible, and how this may best be achieved. Reference should be made to the main NIC divisions of this publication for a more exhaustive discussion of the implications.
An increasing number of employers have recognised that NIC is a significant cost to the business, which, like any other cost, can be mitigated by appropriate planning. However, the potential effect on state benefits (eg state retirement benefits and jobseekers' allowance) of a reduction in the contributor's contributions must always be borne in mind.
Employers pay well over 50% of all contributions. In 2021/22 employers paid £89bn in secondary Class 1 NIC alone, not including Class 1A and Class 1B, out of total NIC collected of 158bn1. None of these contributions earn any benefit entitlement, so if a way can be found to minimise them, employers should be interested.
Employees pay around 40% of all contributions.
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