National insurance contributions

National insurance contributions and rates in 2015/16

Class 1
Employee   Employer  
Earnings per week   Earnings per week  
Up to £155                         Nil* Up to £156                        Nil
£155.01 - £815                    12% Over £156                       13.8%** 
Over £815                         2%   N/A
Over state retirement age     0%                                       13.8%
Employment Allowance                                         £2,000 ***

* Entitlement to contribution-based benefits retained for earnings between £112 and £155 per week

** The rate is 0% in relation to employees under 21 on earnings up to £815 per week

*** Per employer, per year. One claim only for companies in a group or under common control.

Class 1A (on relevant benefits) 13.8% n/a
   
Class 1B (on PAYE settlement arrangement) 13.8%  
   
Class 2 (self employed) £2.80 per week
Class 2 contributions - share fishermen £3.45 per week
Class 2 contributions - volunteer development workers £5.60 per week
Small profits threshold £5,965 per annum
Contributions cease at state retirement age  
Class 3 (voluntary) £14.10 per week
   
Class 4* (Self employed on profits)  
£8,060 to £42,385 9%
Above £42,385 2%
*Exemption applies if state retirement age was reached by 6 April 2015.
   
Maximum contributions  
Class 1 £4,197.60 + 2% of earnings over £42,385 pa.
Class 2 and Class 4 £3,278.15 + 2% of profits over £42,385 pa.

Reliefs

Contracted out Class 1 relief between LEL and UAP (Upper Acrual Point)  
Employee rate 1.4%  1.4%
Employer rate  3.4%  3.4% 

Notes

  1. For children under 16, and employees over state pension age there are no national insurance contributions payable, but employers' contributions remain payable.
  2. No employers national insurance contributions are payable for those under 21.

2016 and beyond

The government has announced that Class 2 national insurance contributions will be abolished from April 2016. At the same time the Class 4 will be reformed to introduce a new contributory benefit test.

Employers will no longer be liable for national insurance contributions in respect of apprentices under the age of 25. This will apply up to the Upper Earnings Limit. This change will come into effect on 6 April 2016.

Did you know?

The Treasury is expecting to raise £113.2 billion (2014/15 - £108.7 billion) from national insurance contributions.