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National Insurance Contributions
Notes
- The Employment Allowance, which came into effect from 6th April 2014, gives eligible employers a reduction of up to £3,000 (2018-19 also £3,000) on their employer Class 1 NICs liability each year, where they have employees or directors who earn enough to give rise to employer Class 1 NICs on their earnings.
- If you earn between £118 and £166 a week, your contributions are treated as having been paid to protect your national insurance record.
- If you're employed, you stop paying Class 1 national insurance when you reach the state pension age.
- If you're self-employed you stop paying:
- Class 2 national insurance when you reach state pension age (or up to 4 months after this to pay off any contributions you owe)
- Class 4 national insurance from 6th April (start of tax year) after you reach state pension age.
- From 6th April 2015, every employer with employees under the age of 21 will no longer be required to pay Class 1 Secondary National Insurance Contributions (2019-20 and 2018-19 both 13.8%) on earnings
up to the Upper Earning Limit (2019-20 £50,000, 2018-19 £46,350), for those employees. This ceases to apply in the pay day after the employee reaches the age of 21.
- For apprentices under the age of 25, the Apprentice Upper Secondary Threshold is also £962 per week. This means that employers will not be required to pay Employer Class 1 NICs in respect of the
wages they pay to apprentice employees under the age of 25 up to £962 per week.
- Employers are liable to Class 1A NICs at 13.8% on most Benefits-in-Kind subject to income tax. Scale Rate Allowances covered by an approval notice or Benefits-in-Kind included in PAYE are not subject
to Class 1A NICs. Certain other benefits are specifically exempt from both Income Tax and Class 1A NICs.
- Class 1B NICs are employer-only contributions, similar to Class 1A, payable by employer on the value of the tax and on certain benefits paid via PAYE Settlement Agreements. The rate is tied to the Class
1 secondary rate (13.8%) and contributions are payable by 19 October following the end of the tax year, along with the tax under the PAYE Settlement Agreement.
- Apprenticeship Levy. Since 6 April 2017, employers are required to pay the Apprenticeship Levy. This levy is set at the rate of 0.5% of an employer’s annual Pay Bill and will be collected through the PAYE
system.
The Pay Bill is the total amount of earnings liable to Class 1 NIC including earnings below the Secondary Threshold (2019-20 £8,632, 2018-19 £8,424). Similarly, where the Age-Related Secondary Percentage
of NIC is 0%, e.g. for employees under the age of 21, such earnings are included in calculating the Pay Bill.
Employers receive an Annual Allowance of £15,000 to offset against payment of the levy, and,
therefore, the levy would be payable only by employers who have Pay Bills in excess of £3 million per year. Where two or more companies are connected, only one company can claim the allowance.
Class 1 (earnings related) |
|
2019-20 |
2018-19 |
Lower earnings limit (LEL) per week |
£118.00 |
£116.00 |
Upper earnings limit (UEL) per week - employees only |
£962.00 |
£892.00 |
Upper secondary threshold for under 21's only |
£962.00 |
£892.00 |
Apprentice upper secondary threshold (AUST) for under 25's only |
£962.00 |
£892.00 |
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Earnings threshold (per week) |
|
2019-20 |
2018-19 |
Primary Threshold (PT) |
£166.00 |
£162.00 |
Secondary Threshold (ST) |
£166.00 |
£162.00 |
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Employee rate |
|
2019-20 |
2018-19 |
Below Lower Earnings Limit |
0.00% |
0.00% |
Between Lower Earnings Limit and Primary Threshold |
0.00% |
0.00% |
Between Primary Threshold and Upper Earnings Limit |
12.00% |
12.00% |
Earnings above Upper Earnings Limit |
2.00% |
2.00% |
Married woman's reduced rate |
Between PT and UEL |
5.85% |
5.85% |
Above the UEL |
2.00% |
2.00% |
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Employer rate |
|
2019-20 |
2018-19 |
Below Secondary Threshold |
0.00% |
0.00% |
Above Secondary Threshold |
13.80% |
13.80% |
Employment allowance per year |
£3,000.00 |
£3,000.00 |
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Class 2 (self-employed flat rate) |
|
2019-20 |
2018-19 |
Per week |
£3.00 |
£2.95 |
Small earnings exemption per year |
£6,365.00 |
£6,205.00 |
Special Class 2 rate for Share Fishermen |
£3.65 |
£3.60 |
Special Class 2 rate for Volunteer Development Workers |
£5.90 |
£5.80 |
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Class 3 (voluntary) |
|
2019-20 |
2018-19 |
Per week |
£15.00 |
£14.65 |
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Class 4 (self-employed) |
|
2019-20 |
2018-19 |
Limits |
Lower profits limit (LPL) per year |
£8,632.00 |
£8,424.00 |
Upper profits limit (UPL) per year |
£50,000.00 |
£46,350.00 |
Rates |
Between LPL and UPL |
9.00% |
9.00% |
Above UPL |
2.00% |
2.00% |
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Class 1A and Class 1B rate |
|
2019-20 |
2018-19 |
Rate |
13.80% |
13.80% |
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Apprenticeship Allowance |
|
2019-20 |
2018-19 |
Apprenticeship Allowance Per Employer |
£15,000.00 |
£15,000.00 |
Apprenticeship Levy Rate |
0.50% |
0.50% |
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