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National Insurance Contributions (NIC)

Class 1 NIC thresholds 2017/18

 weekmonthyear
Lower Earnings Limit (LEL) £113 £490 £5,876
Primary Threshold (PT) 157 680 8,164
Secondary Threshold (ST) 157 680 8,164
Upper Secondary Threshold (UST) 866 3,750 45,000
Upper Earnings Limit (UEL) 866 3,750 45,000

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 2017/18

 EmployeeEmployer
PT/ST to UEL 12% 13.8%
Above the UEL 2% 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 are unaffected.

Class 2 NIC

Rates per week2017/182016/17
Flat rate £2.85 £2.80
Small Profits Threshold (SPT) 6,025 5,965

Notes

  1. Self employed people pay Class 2 NIC if their profits exceed the SPT for the tax year.
  2. Both Class 2 and Class 4 NIC are collected through self assessment.

Class 3 NIC

Rates per week2017/182016/17
Class 3 flat rate £14.25 £14.10

Notes

Anyone who wants to maintain State Pension rights may pay voluntary Class 3 NIC.

Class 4 NIC

Annual2017/182016/17
Lower profits limit £8,164 £8,060
Upper profits limit 45,000 43,000
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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