Do you carry on mixed activity as an employer?

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If as an employer you carry on both activities which give entitlement to reduced employer’s National Insurance contributions and activities which are not eligible for the reduced rate, you will be considered to carry on mixed activity.

Employers who carry on several types of commercial activity must specifically assess each individual activity that it carries on and decide whether one or more activities are covered by the sector exemptions. Each sector-exempt activity will generally result in you as an employer having to use the high rate for all salary costs. This will apply even if only a small proportion of the total activity is sector-exempt. For example, the transport of company goods as part of commercial activity could be covered by sector-exempt road freight transport (industry code 49.41), The transport of materials to a construction site by a construction company or the distribution of goods from store to customer by a furniture shop will be covered by road freight transport (industry code 49.41). As the construction company and furniture store both carry on sector-exempt activity, albeit as a support service to the main activity, the employer must use the highest rate when calculating employer's National Insurance contributions on all salary expenses.

Employers who carry on mixed activity can apply the reduced rate to the proportion of the salary expenses which is linked to associated activities which are covered by the differentiated rates scheme. However, this presupposes that the employer has established clear accounting separation.

‘Clear accounting separation’ means that it is possible to check what proportion of the employer’s salary expenses is associated with the various areas of activity. For more information on the requirements that are imposed concerning clear accounting separation, see the Directorate of Taxes’ report on employer's National Insurance contributions to the National Insurance scheme.

It is the employer itself who decides whether clear accounting separation should be established or whether it wishes not to establish such a divide and therefore pay employer’s National Insurance contributions at the highest rate on all salary expenses. 

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