National Insurance
National Insurance Contributions (NICs)
| 2016/17 |
Employee (primary) |
Employer (secondary) |
|
|---|---|---|---|
| Class 1 | |||
| Payable on weekly earnings of: | |||
| Below £112 (lower earnings limit) | Nil | - | |
| £112 - £155 (primary threshold) | *0% | - | |
| Up to £156 (secondary threshold) | - | Nil | |
| Above £156 | - | 13.8% | |
| £155.01 - £827 (upper earnings limit) | **12% | - | |
|
£156.01 - £827 (upper secondary threshold (UST) for under 21s) |
12% | 0% | |
|
£156.01 - £827 (apprentice upper secondary threshold (AUST) for under 25s) |
12% | 0% | |
| Above £827 | **2% | - | |
|
*No NICs are actually payable but a notional Class 1 NIC is deemed to have been paid; this protects contributory benefit entitlement. **Over state pension age, the employee contribution is generally nil. |
|||
| Employment Allowance | Up to £3,000 (per year) | ||
| Class 1A | On relevant benefits | 13.8% | |
| Class 2 | Self employed | £2.80 per week | |
| Small profits threshold | £5,965 per annum | ||
| Class 3 | Voluntary | £14.10 per week | |
| Class 3A | Voluntary contributions may be available to 5 April 2017 in order to obtain extra additional State Pension (maximum £25 a week) - variable contribution rates according to age | ||
| Class 4 | Self employed on annual profits | ||
| £8,060 - £43,000 | *9% | ||
| Excess over £43,000 | *2% | ||
| *Exemption applies if state pension age was reached by 6 April 2016. | |||
Changes to the Employment Allowance
From April 2016 the annual Employment Allowance for employer NICs increases from £2,000 to £3,000. However, companies where the director is the sole employee will no longer be able to claim this allowance.
Future changes
It was announced that from April 2018, Class 2 NICs will be abolished, and a reform of Class 4 NICs will be undertaken.
Termination payments
From April 2018, employer NICs will be due on termination payments above £30,000 that are already subject to income tax.
The first £30,000 of a termination payment will remain exempt from income tax and the full payment will be outside the scope of employee NICs.