Employee Class 1 NICs rates and category letters
Different categories of employee pay Class 1 National Insurance contributions (NICs) at different rates. This is reflected in a range of different NICs 'category letters'. The tables below outline which letters apply to which employees.
One of the factors that determines which letter applies to an employee is whether or not they're a member of a contracted-out occupational pension scheme. (These employees pay NICs at a lower rate because they have opted out of the State Second Pension.)
There are three types of contracted-out scheme, but only two involve a lower rate of National Insurance. Each pension scheme, whether contracted-out or not contracted-out, has its own set of category letters.
Those that involve a lower rate of National Insurance are referred to as salary-related (ie, defined benefit) and money-purchase (ie, defined contribution) schemes.
The third type of contracting out pension scheme is referred to as an appropriate personal pension, but because it does not involve a reduction in the amount of National Insurance payable it shares the same category letters as those used for not contracted-out schemes.
Please note that if you employ mariners, a separate set of NICs category letters apply. For details, follow the link to HM Revenue & Customs' (HMRC's) CA42 publication.
| All employees who aren't members of a contracted-out COSR or COMP pension scheme, other than the three exceptions listed below in this table. This includes those employees who have appropriate personal pensions. | |
| Married women and widows entitled to pay reduced-rate Class 1 NICs who aren't members of a contracted-out COSR or COMP pension scheme. For more information, see the link at the end of this page. | |
| Employees over the State Pension age. | |
| Employees entitled to defer full-rate payment of Class 1 NICs (who aren't members of a contracted-out COSR or COMP pension scheme) because they're already paying NICs in another job. |
| All employees who are members of a salary-related contracted-out pension scheme, other than the three exceptions listed below in this table. | |
| Married women and widows entitled to pay reduced-rate Class 1 NICs. | |
| Employees over the State Pension age. | |
| Employees entitled to defer full-rate payment of Class 1 NICs because they're already paying NICs in another job. |
| All employees who are members of a salary-related contracted-out pension scheme, other than the three exceptions listed below in this table. | |
| Married women and widows entitled to pay reduced-rate Class 1 NICs. | |
| Employees over the State Pension age. | |
| Employees entitled to defer full-rate payment of Class 1 NICs because they're already paying NICs in another job. |
Once you have established which NICs category letter applies to an employee, using it is straightforward:
- If you complete your payroll calculations using electronic means (such as commercial payroll software), simply enter the appropriate letter into the tool you're using.
- If you still complete your payroll calculations manually, there are downloadable tables for each Class 1 category letter – these show what NICs are due on an employee's earnings. See our guide on PAYE forms and publications.
Female employees entitled to pay reduced rate NICs
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