Any employment law/tax-NI experts here?

davelakers

My wife works for a contract sales organisation in the Pharmaceutical industry, selling drugs to the NHS on behalf of drug companies. She has earned a £4k bonus, for hard work achieving sales targets over the first half of the year, payable by the drug manufacturer. The drug manufacturer however is refusing to pay the £485 employers NI contribution on the bonus and neither is the company my wife works for. My wife is therefore having to pay it and is only receiving £3515 before tax and NI.

Is this correct? It doesnt seem right to me.

rick_chasey

davelakers wrote:

My wife works for a contract sales organisation in the Pharmaceutical industry, selling drugs to the NHS on behalf of drug companies. She has earned a £4k bonus, for hard work achieving sales targets over the first half of the year, payable by the drug manufacturer. The drug manufacturer however is refusing to pay the £485 employers NI contribution on the bonus and neither is the company my wife works for. My wife is therefore having to pay it and is only receiving £3515 before tax and NI.

Is this correct? It doesnt seem right to me.

About a third of my income comes from 'bonuses' and I pay all tax on it like I would if it's my salary.

A bonus is effectively a one off increase in your salary for that month.

As far as I'm aware any NI is just deducted off your salary as part of PAYE.

verylonglegs

Not sure where is best to ask, suppose the Inland Revenue doesn't have guidance on its website? I can kind of see each companies reason for not paying it but whether they are right or not I haven't a clue.

davelakers

I understand she has to pay NI but she is being asked to pay the EMPLOYERS NI contribution as well as her own. This is what is confusing!

t.m.h.n.e.t

Her employer didn't give the bonus so they aren't going to do themselves out of money they don't need to and likewise,the bonus provider isn't her employer so no legal obligation to pay it.

I hate to say it,but it's most likely going to be a bonus closer to 3k

dave the tax

I am a tax expert. The employer is liable for the emplyoers NIC (clue in the name). The third party is reponsiible for the tax but the employer is responsible for the employees and emplyoers NIC. I have not looked at this for years but recall that it is a criminal offence for an employer to force an employee to pay emplyoers NIC.

For evidence on this refer to "Third Party benefits" on HM Revenue & Customs booklet CWG5 (2009) paragraph 38 on page 15.

http://www.hmrc.gov.uk/guidance/cwg5.pdf

If the employer insisted on your wife paying the emplyoer NIC the employee could claim unfiar dismissal etc but this is but extreme for £4k. Ask the employer to put it in writing and say that you will be taking advice/asking HMRC to confirm the position, this would frighten the typcial decent company into doing the right thing.
[/url]

dave the tax

Another point is that the number do not add up. The employer NIC rate is 13.8%, she is not being paid £4,000 - if so the NIC would be £552, she is benig paid £4k less NIC so if her enttitlement is £3,515 that is all she is getting - the answer depends on the small pront of the bonus terms

davelakers

Thanks very much for the replies.

she is trying to take it up with her payroll dept but they arent very forthcoming with answers.

The way the whole thing is being handled makes me think they are screwing her over.

keef66

What exactly does it say about the bonus payments in her contract??

Slack

Will the drugs compnay not pay the gross bonus direct to your Wife, and then she can sort out with HMRC via a self assessment tax return?