Unfortunately, because of the complexities of the new calculation to set the Employee Basic Contribution rate, there are 2 scenarios where KashFlow Payroll cannot guarantee the correct Employee Basic Contribution Rate.
The following scenarios will require a payroll user to double check the figures, and manually amend the Employee Basic Contribution rate where applicable
- Employee who joined NHS Pension Scheme part way through the last year
To calculate correctly, divide the pensionable pay by the number of days between the employee joining the scheme and the end of the tax year.
Multiply the value by 365
Example: Employee joined the NHS pension scheme on 1 January, 2023
- Calculate Pensionable pay since joining = £7,500
- Calculate the Number of days between 1 January 2022 and 5th April 2022 = (31 + 28 + 31 + 5) = 95 days
- Divide pensionable pay by the number of days in the pension scheme in 2021/22 – 7500 / 95 = 95
- Multiply the figure in step 3 by 365 – 95 * 365 = 28,816.75
- Identify the correct tier for 28,816.75 using Table 1
| Tier | Pensionable Pay used to determine contribution rate £ | Contribution rate (%) |
| 1 | £0.00 to £13,330 | 5.7% |
| 2 | £13,331 to £23,819 | 6.1% |
| 3 | £23,820 to £28,186 | 6.7% |
| 4 | £28,187 to 35,364 | 8.2% |
| 5 | £35,365 to £35,521 | 9.8% |
| 6 | £35,522 to £37,086 | 10.0% |
| 7 | £37,087 to £45,079 | 10.5% |
| 8 | £45,080 to £48,784 | 10.8% |
| 9 | £48,785 to £68,222 | 11.3% |
| 10 | £68,223 and above | 13.7% |
Ensure the Employee Basic Contribution rate is set to 8.2%
2. Employee who did not pay the same contribution rate throughout the previous year
To calculate, divide the pensionable pay for the period starting when the contribution rate last changed to the end of the previous tax year. Multiply this value by 365
Scenario: Employee changed pension contribution rate mid year:
Job 1: 6th April 2021 – 31 October 2021 = 15,000 pensionable pay
Job 2: 1st November 2021 – 5th April 2022 = 25,000 pensionable pay
Calculation:
- Pensionable pay since rate changed: £25,000
- Number of days between 1st November – 5th April = (30 + 31 + 31 + 28 + 31 + 5) = 156 days
- Divide the amounts from steps 1 and 2 – 25,000 / 156 = 26
- Multiply the figure from step 3 by 365 26 * 365 = 58,494.90
- Identify the correct tier for the amount in step 4 – 58,494.90 using Table 1
| Tier | Pensionable Pay used to determine contribution rate £ | Contribution rate (%) |
| 1 | £0.00 to £13,330 | 5.7% |
| 2 | £13,331 to £23,819 | 6.1% |
| 3 | £23,820 to £28,186 | 6.7% |
| 4 | £28,187 to 35,364 | 8.2% |
| 5 | £35,365 to £35,521 | 9.8% |
| 6 | £35,522 to £37,086 | 10.0% |
| 7 | £37,087 to £45,079 | 10.5% |
| 8 | £45,080 to £48,784 | 10.8% |
| 9 | £48,785 to £68,222 | 11.3% |
| 10 | £68,223 and above | 13.7% |
6. Ensure Employee Basic Contribution rate is set to 11.3%