30 Sep 2010

National Insurance

National insurance contributions

£ per week (unless stated)2009-102010-112011-12
Lower earnings limit, primary Class 1£95£97
Upper earnings limit, primary Class 1£844£844
Upper Accruals Point£770£770
Primary threshold£110£110
Secondary threshold£110£110
Employees' primary Class 1 rate between primary threshold and upper earnings limit11%11%12%
Employees' primary Class 1 rate above upper earnings limit1%1%
Employees' contracted-out rebate - salary-related schemes12.80%12.80%
Employees' contracted-out rebate - money-purchase schemes1.60%1.60%
Married women's reduced rate between primary threshold and upper earnings limit4.85%4.85%
Married women's rate above upper earnings limit1%1%
Employers' secondary Class 1 rate above secondary threshold12.80%12.80%13.80%
EmployersÕ contracted-out rebate, salary-related schemes'3.70%3.70%
Employers' contracted-out rebate, money-purchase schemes1.40%1.40%
Class 2 rate£2.40£2.40
Class 2 small earnings exception (per year)£5,075 per year£5,075 per year
á Special Class 2 rate for share fishermen£3.05£3.05
Special Class 2 rate for volunteer development workers£4.75£4.85
Class 3 rate (per week)£12.05£12.05
Class 4 lower profits limit (per year)£5, 715 per year£5, 715 per year
Class 4 upper profits limit (per year)£43, 875 per year£43, 875 per year£42,225 per year
Class 4 rate between lower profits limit and upper profits limit8%8%
Class 4 rate above upper profits limit1%1%

Class 1A NICs are calculated using the previous year’s benefit figure and the rate appropriate at the due date – July.

22 July Emergency Budget

The Budget announced that the level at which employers start to pay NICs will increase by £21 per week above indexation from April 2011. The value of indexation will be determined by data available in the autumn.

The Government will shortly announce a three-year scheme to exempt new businesses in targeted regions from up to £5,000 of class 1 employer NICs payments, for each of their first 10 employees hired in their first year of business. Subject to meeting the necessary legal requirements, the Government aims to have the scheme up and running by September, but any qualifying new business set up from today will also benefit.

The Budget announced that, in 2011-12, the income tax personal allowance for under 65s will be increased by £1,000 in cash terms, taking it from £6,475 in 2010-11 to £7,475 in 2011-12. To ensure that the majority of higher rate taxpayers will pay the same total level of income tax and National Insurance Contributions (NICs) as previously planned, the Government will also reduce the basic rate limit for tax by £2,500, and the upper earnings and profits limits for NICs by £1,650, based on current estimates of the Retail Prices Index (RPI). Exact figures for the basic rate limit and higher rate threshold will be confirmed in the autumn.

The upper earnings limit and the upper profits limit will maintain alignment with the income tax higher rate threshold.

*Reduced rate for married women between primary threshold and upper earnings limit is 4.85 per cent for 2010-11 and 5.85 per cent for 2011-12. The reduced rate applies to women married before 6 April 1977 who have elected to pay a reduced rate of class 1 contributions.

*Class 2 NICs are paid at a weekly flat rate of £2.40 by all self-employed persons. Those with profits less than, or expected to be less than, the level of the small earnings exception may apply for exemption from paying Class 2 contributions.
**The exact figure for Class 2 for 2011-12 will be determined by data available in the autumn.


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