The HMRC Software Developers Support team have provided some further detail for developers in relation to the BIK Class 1A National Insurance Contributions (NICs) rounding rules as part of the MPBiKs measure.
These rounding rules will apply to all payrolled benefits in kind which attract Class 1A from 6th April 2027 and align with the existing Class 1A NICs rounding regulations:
Calculation of Class 1A NICs contributions
General rule
The rules for rounding in Class 1A NICs are the same as for Class 1 NICs, round NICs calculations to the nearest penny (amounts of less than Ā£0.005 are disregarded). See National Insurance Manual NIM11002 for more information.
Practical application
For payrolled benefits in kind, we expect employers to calculate and report Class 1A NICs at employee level for each pay period.
This means a single rounding point should be applied to the total Class 1A NICs liability for each employee in each pay period. Where an employee has more than one payrolled benefit in kind, employers should not apply separate rounding calculations to each individual benefit before calculating the total liability.
The resulting rounded Class 1A NICs amount for the employee for that pay period should then be reported on the RTI Full Payment Submission (FPS) using data item 350, “Total real-time Class 1A NICs due in Pay Period ā payrolled benefits in kind (PBiKs)” and the year to date (YTD) Class 1A NICs amount should also be accurately reflected using data item 351 (Total real-time Class 1A NICs amount YTD ā payrolled benefits in kind (PBiKs))
The examples below summarise this approach. The interim guidance will be updated in due course.
Example 1: Round Up
An employee is paid weekly and receives two benefits in kind from their employer during a relevant pay period. A company car benefit with a pay period value of Ā£200.00 and a medical benefit with a pay period value of Ā£38.71. Both benefits attract employer Class 1A NICs liability.
Benefit amount subject to Class 1A NICs in pay period: Ā£200.00 + Ā£38.71 = Ā£238.71 Employer liable to Class 1A NICs at a rate of 15%: Ā£238.71 x 15% = Ā£35.8065 Applying Rounding Rule: Third decimal place is 6 (>5) Rounded value to report = Ā£35.81
Example 2: Round Down
An employee is paid monthly and receives two payrolled benefits in kind from their employer during the relevant pay period. A company car benefit with a pay period value of Ā£400.00 and a medical benefit with a pay period value of Ā£62.63. Both benefits attract employer Class 1A NICs liability.
Benefit amount subject to Class 1A NICs in pay period: Ā£400.00 + Ā£62.63 = Ā£462.63 Employer liable to Class 1A NICs at a rate of 15%: Ā£462.63 x 15% = Ā£69.3945 Applying Rounding Rule: Third decimal place is 4 (ā¤5) Rounded value to report = Ā£69.39
The Data Item Guide will clarify for you what information is to be reported, and in which fields, in RTI submissions from your payroll software product.
Opinion
PAYadvice would point out that the NIC rounding is different to standard natural rounding rules.
At school many of us will have been educated that rounding applies as follows:
The Core Rule (“5 or More”)
- 0 to 4 (Round Down): If the digit immediately to the right of your target place value is 0, 1, 2, 3, or 4, keep the target digit the same and drop or zero out the remaining digits to the right.
- 5 to 9 (Round Up): If the digit immediately to the right is 5, 6, 7, 8, or 9, increase the target digit by 1 and drop or zero out the remaining digits to the right.
Excel and computer programmes will default to this natural or core rounding principle by default – however, National Insurance regulations are different and software needs to ensure that it applies the statutory correct rounding and not natural rounding or the core rule.
So what is the difference, within NIC calculations, 0.5 is not rounded up, but rounded down, make sure your software calculations align with the HMRC NI required rounding rules.
PAYadvice.UK 19/10/2026