Director National Insurance (NI) refers to the specific National Insurance contributions applicable to company directors in the UK. These contributions differ from those for regular employees due to the unique earning patterns of directors.
To ensure compliance with tax regulations and maintain accurate payroll processing, it is essential to configure Director NI for employees who qualify.
Proper configuration prevents potential underpayment or overpayment of National Insurance, protecting both the employer and the director from future liabilities.
Most Director NI calculations are handled automatically by the system. You only need to activate the Director Indicator for relevant employees.
To activate the Director indicator, follow the steps below in Portal.
📌Note: If you need to calculate the Director NI using the alternative method (based on pay for that period), please raise a new support case to request this change.
Click Employee then search for the employee.
Click View then select Sundry Profile.
Click Work Details then turn on the Director toggle.
As per HMRC guidance:
Standard method = Calculated on TYD Cumulative Earnings (Annualised)
Alternative method = Calculated on Pay for that Period
📌Note: We recommend applying changes to the Director NI settings at the beginning of the tax year, ideally during April in the first tax month or tax week.
If you need to change the Director NI flag mid-year, support will need to run a script to ensure correct calculations for both employee and employer NI.
If incorrect NI calculations occur after a mid-year change, please raise a new support case and provide the following information:
Employee reference
Description of the change (e.g., adding the Director NI flag for the first time).
Effective period of the change.
Expected vs. actual Employee/Employer NI calculations.
Reference to this article.