The Payroll Site

Which method do you use for tax and NIC calculation?

There are two HMRC approved methods of calculating PAYE income tax: The manual method and the computerised method. The amount of tax due can differ by up to 2p between the two methods. We use the computerised method.

There are two HMRC approved methods of calculating National Insurance Contributions: The table method and the exact percentage method. We use the exact percentage method.

The majority of computerised payroll systems use the same methods as us and therefore should produce identical figures for tax and National Insurance Contributions.

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