National Insurance – Budget Report 18 March 2015


National Insurance Contributions (NICs)

2015/16 Employee(primary) Employer(secondary)
Class 1 (not contracted out)
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 – £815 (upper earnings limit) **12%
    £156.01 – £815 (upper secondary threshold –
under 21s)
12% 0%
    Above £815 **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 £2,000 (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 4 Self employed on annual profits
£8,060 – £42,385 *9%
Excess over £42,385 *2%
*Exemption applies if state pension age was reached by 6 April 2015.

Changes to employer NICs

From 6 April 2015 employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the upper secondary threshold to any employee under the age of 21. This will apply to both existing employees and new staff taken on by employers. No individual’s state pension entitlement will be affected by the measure.

From April 2015 the £2,000 annual Employment Allowance for employer NICs will be extended to care and support workers.

From April 2016 employer NICs up to the upper secondary threshold for apprentices aged under 25 will be abolished.

Abolition of Class 2 NICs

The Government announced its intention to abolish Class 2 NICs in the next Parliament and reform Class 4 NICs to introduce a new benefit test. The Government will consult on the detail and timing of these reforms later in 2015.