Why do employers pay NI?

Posted by AnotherYadaYada@reddit | AskUK | View on Reddit | 37 comments

I feel naive asking this, never knew about it or really need to know. I thought it was just employees who paid NI. Why are employers paying NI for the employees they have or am I missing something?

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37 Comments

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ohshaiW3@reddit

It’s just a way to make it seem like you pay less income tax than you actually do. A clever accounting tricky by the government to hide the reality from citizens.

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AnotherYadaYada@reddit (OP)

I’m talking about employers, not the workers.

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markhewitt1978@reddit

You've kind of proven their point. The employers NI is essentially still a tax on your employment. It's just a tax you don't see and isn't on your payslip but it's still very much there.

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You can say that about pretty much any business expense that you may indirectly influence. Tax and NI (including that which the company pay) wouldn't magically end up in the employees hands if they didn't need to be paid. Therefore in my eyes they're pointless even thinking about.

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markhewitt1978@reddit

It's not indirect at all. It's a direct tax on the employees salary. Effectively the amount the company has to pay you is more than your notional salary. It is not the same as eg paying for office space or computers etc. it's a statutory tax.

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Namiweso@reddit

Right okay but my main point was is if that wasn't a thing, you wouldn't suddenly get paid more.

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markhewitt1978@reddit

There's no reason to suspect either way. It's part of your salary.

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Namiweso@reddit

Right...

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Panceltic@reddit

Same thing, it’s a tax on your salary either way.

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AnotherYadaYada@reddit (OP)

I get that, but I literally did not know employers pay it too or they are required to pay it and it’s also added in to us

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gt94sss2@reddit

Employers NI will be listed on your payslips

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Panceltic@reddit

Well, now you know :)

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AnotherYadaYada@reddit (OP)

Yup. Ripped off at every turn. They’ll be charging for air next.

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ohshaiW3@reddit

Yeah, me too. On paper, the employer pays it, but it’s a cost directly associated with your employment so it’s just another form of tax on you as a worker. It doesn’t matter how you try to dress it up.

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Red_Splinter@reddit

They're saying that you are effectively paying it (or receiving a lower wage because of it) as the wage that you are offered and receive is taking into account the NI that the employer is paying (and which you don't see)

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mattjgalloway@reddit

What u/ohshaiW3 is saying is that if the employer didn't pay that tax, you would. Your employer would pay you more money (because they're not paying it in tax) and you'd then pay the tax yourself. But the way it is with employee and employer NICs, you the employee are oblivious to the true extent to which you're taxed. (That's putting it simply and exaggerating the economic point somewhat).

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Qrbrrbl@reddit

Yes, but its ultimately the workers that are paying for it. If your employer is having to lay it to the government, they will offer you lower salary as a result. In theory, if employers didn't have to pay Employer NI, that money could be paid to the employee instead, making it a stealth tax In reality they would probably just take more profit and pay you the same, but it's still fundamentally a tax

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arc4angel100@reddit

Yes but those costs are calculated by businesses as part of an employees cost to them so whether it's the employee or the employer paying NI and other payroll costs doesn't matter to an employer as they will factor both into the cost of an employee which will dictate hiring policies and pay rises.

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freecheesechallenge@reddit

I'd never thought about it like that, but makes absolute sense now you point it out. Gross pay for the employer is actually more than what is on the payslip but just shows as a different tax deduction.

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Panceltic@reddit

My payslip actually shows employer’s contributions as well

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SavingsSquare2649@reddit

It’s not included as part of your gross pay though is it?

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Panceltic@reddit

No it isn’t, but it’s added as a note at the bottom. Employer’s NI and employer’s pension contributions, both for the month and YTD.

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ThatMadSniper@reddit

Because that's the legal obligation. Currently an employer pays 13.8% of what the employer pays (it's added on, so essentially HMRC is receiving 113.8% pay). There are plenty of additional little bits of information that gets taken into account but that's the general gist of it.

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feetflatontheground@reddit

Employers pay 13.8% of an employees pay, and the employee pays in 8/10%. So the employer pays in more than the employee.

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AnotherYadaYada@reddit (OP)

But why? Employers will pay tax and NI in their own salaries. I know there are clever accounting things you can do, but if they pay themselves a wage they will pay NI

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feetflatontheground@reddit

It's a tax. My employer is a big company. The law requires them to pay (on my behalf), as well as me. The government spends it on providing benefits and whatever else they do with taxes.

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AnotherYadaYada@reddit (OP)

Ridiculous to be honest. I get it’s factored into salaries the employer pays but this is ridiculous absolutely no reason for employers to pay it. As everyone says, just a tax worded differently.

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feetflatontheground@reddit

You rather pay it yourself?

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ohshaiW3@reddit

For completeness, it’s worth mentioning that the percentage only applies to amounts earner over £5000 (previously £9100). So in aggregate, it’s a slightly lower percentage than 13.8%.

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ubiquitous_uk@reddit

Only some do. It's based on the total of NI paid by the employer in total. I'm not sure what the limit it, but over a certain amount you don't get the relief.

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Proof_Drag_2801@reddit

NI is a two sided tax. It taxes you on having a job (because we obviously don't want to encourage that) and it taxes your employer for having the audacity to create employment. /S

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Conscious_Analysis98@reddit

Wont be long before Oxygen is taxed

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Proof_Drag_2801@reddit

https://youtu.be/eDdnI87xLVY?si=PMHPT3eyiT19gedA

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Both_Trick7621@reddit

Government want more money

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specto24@reddit

Yeah, because public want more services. Particularly pensioners who want sweet sweet triple lock and social care but no migrants.

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mynameisfreddit@reddit

It was supposed to be for healthcare and pensions. So people don't fully appreciate how much they are taxed. It's a tax on your pay.

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