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National insurance contributions

National insurance contributions and rates in 2020/21

Weekly earnings Employee Weekly earnings Employer
Up to £183 nil* Up to £169 nil
From £183 to £962 12% Over £169 to £962 13.8%&**
Over £962 2% Over £962 13.8%
Over state pension age 0% Over state pension age 13.8%

* Entitlement to contribution-based benefits are retained for earnings between £120 and £183 per week.

** 0% for staff under 21 and apprentices under 25 on earnings up to £962 a week.

Employment allowance

An employer can claim employment allowance of £4,000. Only one claim may be made by the employer and any connected employers. Not available if the only paid employee is a director.

Class 1A (on relevant benefits) provided to employees and directors 13.8%
   
Class 1B (on PAYE settlement arrangement) 13.8%  
   
Class 2 (self-employed) £3.05 per week
Class 2 contributions - share fishermen £3.70 per week
Class 2 contributions - volunteer development workers £6 per week
Small profits threshold - no compulsory NICs if profits do not exceed £6,475 per annum
Contributions cease at state retirement age  
Class 3 (voluntary) £15.30 per week
   
Class 4* (self-employed on profits)  
£9,500 to £50,000 9%
Above £50,000 2%
*Exemption applies if state retirement age was reached by 6 April 2020.
 Reduced rate for certain married women
(on earnings between £183 and £962)
 5.85%
Maximum contributions  
Class 1 £4,860.96  + 2% of earnings over £50,000  pa.
Class 2 and Class 4 £3,803.60  + 2% of profits over £50,000  pa.
Apprenticeship levy allowance (employer*) £15,000
Apprenticeship levy rate 0.5%

Apprenticeship levy

Levy-paying employers can create an account on the apprenticeship service in order to spend levy funds on apprenticeships, manage their apprentices and manage payments to training providers.

Employers are entitled to an annual levy allowance of £15,000 to set against this levy.

They can set one-twelfth of the levy per tax month on a cumulative basis, unused levy allowance can be carried forward and used in a later month within the same year.

*Shared between connected companies - allocated as the companies choose before the start of the tax year.

Notes

  1. For children under 16, and employees over state pension age there are no national insurance contributions payable, but employers' contributions remain payable in respect of employees over state pension age.
  2. No employers NIC are payable on earnings up to £962 per week for those under 21, or 25 for an apprentice.

Class 1A NICs are now due on termination payments over £30,000 and sporting testimonials over £100,000. It is important to note that the Class 1A NICs associated with these payments will be collected through real-time information via the PAYE scheme and, therefore, is payable at the time it arises.

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