Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over the Secondary threshold (ST) for the tax year.
Companies also pay employer’s National Insurance on directors’ salaries. This applies even if you’re the director of your own company the only employee within the company.
Unlike general employees', where calculations are made on a non-cumulative basis from what they earn in each pay period Director Contributions are worked out from their annual earnings.
Standard annual earnings period method - Annual Cumulative Method
This method is common for directors who are paid irregularly. Each time your director is paid the system works out their National Insurance contributions for their total pay over the tax year so far, including bonuses.
Alternative method - Year To Date Cumulative Method.
This method is common for directors who are paid regularly. Each time your director is paid the system works out their National Insurance only on their pay for that period, including bonuses. At the end of the tax year, the system works out whether more employee National Insurance is due and if so deducts it from their final payment due of the tax year.