National Insurance and State Pensions

5. Reducing Contributions

5.1 Offer employees a contracted-out company pension scheme. This reduces contributions for everybody.

• These savings should be weighed against the cost to you of providing a company pension scheme - generally at least 10 per cent of employee pay.

5.2 Structure your pay so that staff earn just below the NI threshold (but ensure you are paying the national minimum wage).

• If you have any low-paid staff, think carefully before increasing their pay above the £105 a week threshold.

5.3 Some taxable 'benefits in kind' are not subject to employer (or employee) NICs.

• Provision of most employer childcare facilities, counselling, subsidised meals and light refreshments are not liable to NICs provided they are made available to all employees on the same terms.Nor are long-service awards of goods (of up to £50 per year of service to employees who have served for at least 20 years) or employer-financed annual parties (costing £150 per head per year). However, payment of cash or cash vouchers is subject to NICs.