National Insurance

2010/11 National Insurance Contributions (NICs)
  Employer Employee
Payable on weekly earnings of
£97 (lower earnings limit) to £110 0% 0%
£110.01 - £770 (upper accrual point) 12.8% 11%
£770.01 - £844 (upper earnings limit) 12.8% 11%
Over £844 12.8% 1%

Over state retirement age, the employee contribution is generally Nil

Class 1A On relevant benefits 12.8% Nil
Class 2 Self employed £2.40 per week
Limit of net earnings for exception £5,075 per annum
Class 3 Voluntary £12.05 per week
Class 4* Self employed on profits  
£5,715 - £43,875 8%
Excess over £43,875 1%
*Exemption applies if state retirement age was reached by 6 April 2010

Tax and NICs – What lies ahead?

In his 2008 Pre-Budget Report the Chancellor announced that the main NIC rates would be increased by 0.5% for 2011/12. In his 2009 Pre-Budget Report he announced a further 0.5% increase effective from 6 April 2011, taking rates to:

Employee Class 1 12%
Employer Class 1 and Class 1 A/B 13.8%
Self-employed Class 4 9%
Class 1/4 additional rate 2%

With effect from 6 April 2011, the primary threshold and lower profit limits were to be broadly aligned with the income tax personal allowance. It has been announced that these thresholds will be increased by a further £570 to compensate the lowest earners (up to £20,000) for the increase in Class 1 and 4 rates.




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