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National insurance

Employer and employee rates.

Class 1

Employees start paying Class 1 NIC from age 16 (if sufficient earnings).

Employers pay Class 1 NIC in accordance with the table below.

Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold.

Employees Class 1 NIC stop when they reach their 'State Pension age'. The employer's contribution continues.

Employees

2020/21:

Earnings per week %
Up to £183 Nil
£183.01 - £962 12
Over £962 2

Entitlement to state pension and other 'contribution-based benefits' is retained for earnings between £120 and £183 per week

2019/20:

Earnings per week %
Up to £166 Nil
£166.01 - £962 12
Over £962 2

Entitlement to state pension and other 'contribution-based benefits' is retained for earnings between £118 and £166 per week

Employers

2020/21:

Earnings per week %
Up to £169 Nil
Over £169 13.8
Upper Secondary Threshold (for under 21s and apprentices under 25)
Up to £962
0

2019/20:

Earnings per week %
Up to £166 Nil
Over £166 13.8
Upper Secondary Threshold (for under 21s and apprentices under 25)
Up to £962
0

Other National Insurance payable by employers

Class 1A

13.8% on broadly all taxable benefits provided to employees and on certain taxable termination payments in excess of £30,000.

Class 1B

13.8% on taxable PAYE Settlement Agreements.

Class 2 and 4 (self-employed)

A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits).

Class 2 NIC stop when a person reaches State Pension age.

Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

2020/21:

Class 2 (£)
Flat rate per week 3.05
Small Profits Threshold (per annum) 6,475

2019/20:

Class 2 (£)
Flat rate per week 3.00
Small Profits Threshold (per annum) 6,365

No Class 2 is due if the amount of trading profits assessable to income tax and Class 4 NIC is below this figure. However, a person might decide to carry on paying Class 2 voluntarily to accrue entitlement to the State Pension and entitlement to other benefits.

Class 4

2020/21:

Annual profits %
Up to £9,500 Nil
£9,500.01 - £50,000 9
Over £50,000 2

2019/20:

Annual profits %
Up to £8,632 Nil
£8,632.01 - £50,000 9
Over £50,000 2

Class 3

A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.

Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Flat rate per week: £15.30 (2019/20: £15.00)

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Lloydbottoms Chartered Accountants, 118 High Street, Staple Hill, Bristol BS16 5HH

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