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National Insurance – Budget Report 20 March 2014

National Insurance Contributions (NICs)

Class 1 (not contracted out) Employee
Payable on weekly earnings of:
    Up to £111 (lower earnings limit) Nil
    £111 – £153 (primary threshold) *0%
    Below £153 (secondary threshold) Nil
    Above £153 13.8%
    £153.01 – £805 (upper earnings limit) **12%
    Above £805 **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 £2.75 per week
Limit of net earnings for exception £5,885 per annum
Class 3 Voluntary £13.90 per week
Class 4 Self employed on profits
£7,956 – £41,865 *9%
Excess over £41,865 *2%
*Exemption applies if state pension age was reached by 6 April 2014.

Employer NICs for under-21s

As announced in the 2013 Autumn Statement, from 6 April 2015 employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the Upper Earnings Limit to any employee under the age of 21. This will apply to both existing employees and to employers taking on new staff. No individual’s state pension entitlement will be affected by the measure.

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