National Insurance

National Insurance contributions are a tax on earnings designed to fund social security benefits.

Employers’ obligations

Employers must provide the appropriate National Insurance payments each month to the Inland Revenue Accounts Office in respect of both employer and employees - less any gross Statutory Sick Pay and Statutory Maternity Pay.

National Insurance Contributions are made along with Income Tax to the Inland Revenue Accounts Office and are due to be paid by the 19th of the month following the month of deduction, or the 22nd if paying electronically.

Employers must note the deductions for National Insurance and income tax separately on an employee's payslip and calculate contributions with reference to the national insurance contributions table.

Note: all such payments made on an employee's behalf are detailed on a Form P11 (deductions working sheet).

There are four classes of contribution for National Insurance payments, and Class 1 divides into primary and secondary contributions.

Primary Class 1 contributions paid by employees

Primary Class 1 contributions by employees are paid at three different rates for all employment that is contracted into the State Earnings Related Pension Scheme (SERPS):

Category A is a standard rate for employees over 16 and under pension age.
Category B is a reduced rate for some married women and widows.
Category C (1) is a rate for contributions made by employers on behalf of employees over pensionable age

Where employment is contracted out of SERPS, there are three further categories of Primary Class 1 contribution:

Category D is the standard rate.
Category E is a reduced rate.
Category C (2) is a rate applicable to employer-only contributions

Secondary Class 1 contributions paid by employers

Secondary Class 1 contributions depend on whether the employment is contracted in or out of SERPS. If opted in, the employer pays either Category A, B or C(1) for all earnings above the lower earnings limit. If opted out, the employer pays either Category D, E or C(2) for all earnings above the lower and below the higher earnings limits.

Classes 2, 3 and 4

Class 2 are fixed contributions paid by the self-employed.
Class 3 are voluntary contributions paid by those who would otherwise be ineligible for social security benefits
Class 4 are contributions paid by the self-employed, calculated as a percentage between a higher and a lower limit