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Why do I have to pay employer NICs for an employee who doesn't have to pay employee NICs due to being over state pension age (NI Category C)?

Even though employees over State Pension age (Category C) don't pay employee National Insurance contributions, employers are still legally required to pay employer National Insurance contributions on their wages.

Here's a more detailed explanation:

  • Employee NICs vs. Employer NICs: National Insurance Contributions (NICs) are made up of both employee contributions (deducted from pay) and employer contributions (paid by the employer).
  • Category C and State Pension Age: Employees who have reached State Pension age are assigned National Insurance Category C.
  • No Employee NICs for Category C: Employees in Category C (over State Pension age) typically do not pay employee NICs.
  • Employer NICs Still Apply: Despite the employee not paying NICs, employers still have a legal obligation to pay employer NICs on the earnings of employees in Category C.
  • Why Employers Pay: Employer NICs help fund social services, including benefits that employees may one day need.
  • Reporting and Paying: Employers need to change an employee's National Insurance category letter to 'C' in their payroll software when they reach State Pension age, indicating that they will no longer deduct National Insurance from their pay, but the employer still needs to pay employer contributions.