National Insurance Contributions (NICs)

  2010/11
Class 1 (not contracted out) Employer Employee
Payable on weekly earnings of:    
    below £97 (lower earnings limit) Nil Nil
    £97 to £110 (earnings threshold)     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 2011 (6 April 2010)

Changes to NICs - What lies ahead?

As previously announced, from April 2011 rates will rise by 1% 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%

 

The March Budget raised the employees' earnings threshold and lower profit limits. The Emergency Budget announced a rise in the employers' earnings threshold of £21 a week above indexation, and a reduction in the upper earnings limit to maintain the alignment with the basic rate income tax limit.

Regional employer NICs holiday for new businesses

Details of a scheme to assist new businesses in targeted areas of the UK will be announced soon. Within a three year qualifying period, employers eligible for the scheme will not have to pay the first £5,000 of Class 1 employer NICs due in the first 12 months of employment. This will apply for each of the first 10 employees hired in the first year of business. Subject to meeting the necessary legal requirements, the scheme is intended to start no later than September 2010. Any new business set up from 22 June 2010 which meets the criteria set out in the forthcoming announcement will be eligible for the scheme.

The targeted countries and regions will be: Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.

 

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