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National Insurance Contributions (NIC)

Class 1 NIC thresholds 2016/17

 weekmonthyear
Lower earnings limit (LEL) £112 £486 £5,824
Primary threshold (PT) 155 672 8,060
Secondary threshold (ST) 156 676 8,112
Upper secondary threshold (UST) 827 3,583 43,000
Upper earnings limit (UEL) 827 3,583 43,000

Notes

  1. No NIC are payable by employee or employer on earnings up to the PT (employees) or ST (employer).
  2. No employee NIC are payable once the employee reaches state retirement age, but employer NIC continue to be payable.
  3. No employer NIC are payable on earnings up to the UST for employees aged under 21, or apprentices aged under 25, at the date of the payment.
  4. No employee NIC are payable on earnings between the LEL and the PT, but when reported by the employer, the employee receives credit towards the State Pension.

Class 1 NIC rates 2016/17

 EmployeeEmployer
PT/ST to UEL 12.0% 13.8%
Above the UEL 2.0% 13.8%

Notes

  1. Employers and employees both contribute at rates dependent on the level of earnings during a weekly, monthly or annual earnings period.
  2. A person with more than one employment can defer the payment of some employee NIC until after the end of the tax year. The total amount payable is then checked and limited so the full 12% rate is only applied to income between the PT and the UEL.
  3. An 'employment allowance' of £3,000 per qualifying business gives exemption from Class 1 Employer NIC. Some businesses are excluded, including certain sole director companies. Employee NIC is unaffected.

Class 2 NIC

Rates per week2016/172015/16
Flat rate £2.80 £2.80
Share fisherman 3.45 3.45
Volunteer development workers 5.60 5.60
Annual small profits threshold (SPT) 5,965 5,965

Notes

  1. Self-employed people pay Class 2 NIC on their profits that exceed the SPT.
  2. From 2015/16 both Class 2 and Class 4 NIC are collected through self-assessment.

Class 3 & Class 3A NIC

Rates per week2016/172015/16
Class 3 flat rate £14.10 £14.10

Notes

  1. Anyone not in work who wants to maintain State Pension rights may pay voluntary Class 3 NIC.
  2. Individuals who reach State Pension age before 6 April 2016 can top-up the amount of their State Pension by up to £25 per week by paying voluntary Class 3A NIC in the period 12 October 2015 to 5 April 2017.
  3. The amount of Class 3A NIC required to buy an extra £1 per week of State Pension varies according to the payer's age.

Class 4 NIC

Annual2016/172015/16
Lower profits limit £8,060 £8,060
Upper profits limit 43,000 42,385
Main rate 9.0% 9.0%
Additional rate 2.0% 2.0%

Notes

  1. Class 4 NIC are payable on profits from UK trades or professions that exceed the lower profits limit and are chargeable to Income Tax.
  2. The additional rate is payable on profits that exceed the upper profits limit.
  3. An individual who is both employed and self-employed may pay Class 1, Class 2 and Class 4 NIC, subject to the maximum limit for the year.
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Directors:  Paul Cutter FCA | Kate Jones FCCA, ACA | Dave Hazlehurst FCCA, CTA

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