| UK Tax Calculator 2009-10 |
UK National Insurance
Anyone who is aged between 16 and state pension age - currently 60 for a woman and 65 for a man - may have a liability to pay National Insurance contributions. You may be liable to pay National Insurance contributions if you:
work for yourself (self employed), and pay Class 2 and Class 4 National Insurance contributions
The amount of contributions you have to pay will depend on whether you are an employed earner or self employed; and the amount you earn. There may be occasions when you may work for an employer and for yourself at the same time. In these instances you may have to pay more than one class of contribution.
Someone who is not liable to pay National Insurance contributions may be able to pay certain contributions on a voluntary basis (normally Class 3 National Insurance contributions). These contributions are payable to safeguard or improve benefit entitlement for Basic State Pension and Bereavement Benefits.
Anyone who is over State Pension age does not have to pay Class 1 or Class 2 National Insurance contributions, except on earnings that should have been paid before State Pension Age.
Employers must also pay National Insurance contributions for each person they employ who is aged 16 or over and whose earnings are above the defined thresholds.
Classes of National Insurance Contributions
| Class | Description |
|---|---|
| Class 1 | Paid by people who work as employed earners, and their employers. |
| Class 1A | Paid only by employers who provide certain directors and employees with benefits in kind which are available for private use, for example, cars and fuel. |
| Class 1B | Paid only by employers who enter into a Pay As You Earn (PAYE) Settlement Agreement (PSA) with HM Revenue & Customs for tax purposes. |
| Class 2 | Paid by people who are self employed. |
| Class 3 | Voluntary contributions paid by people who wish to protect their entitlement to the State Pension and who do not pay enough National Insurance contributions in another class. |
| Class 4 | Normally paid by self-employed people in addition to Class 2. Class 4 contributions do not count towards benefits. |
Class 1 National Insurance Contributions
Employed earners and their employers pay Class 1 contributions. Class 1 contributions are earnings related and are made up of two elements:
and the employer's contribution (secondary contribution)
An employee is liable to pay contributions if they:
earn more than the Earnings Threshold, (ET)
Employees pay contributions on all of their earnings above the ET. They pay at a main percentage rate on earnings up to the Upper Earnings Level (UEL) and at a lower percentage rate on all earnings above the UEL.
An employer is liable to pay contributions on all their employee's earnings above the ET, if the employee
is aged 16 or over, and
earns more than the ET.
Some people do not work for an employer in the UK, and are not attached to another UK business responsible for operating National Insurance on their behalf. These people have to account for their own Class 1 contributions through a NI only Direct Collection scheme.
If you're an employee, your employer will collect your Class 1 National Insurance contributions out of your earnings via the Pay as You Earn (PAYE) scheme.
Some people may have to pay Class 1 contributions as employees on earnings, which are also included in the trading profits, which form the basis of their Class 4 contributions.
The payment of Class 1 National Insurance Contributions gives entitlement to a range of contributory benefits. The benefits are: -
Incapacity Benefit
Maternity Allowance
Basic State Pension
Additional State Pension
Bereavement Benefits
Bereavement Allowance
Bereavement Payment
National Insurance - Rates and allowances
| £ per week | 2009-10 |
|---|---|
| Lower earnings limit, primary Class 1 | £ 95 |
| Upper earnings limit, primary Class 1 | £ 844 |
| Upper accruals point | £ 770 |
| Primary threshold | £ 110 |
| Secondary threshold | £ 110 |
| Employees' primary Class 1 rate between primary threshold and upper earnings limit | 11 % |
| Employees' primary Class 1 rate above upper earnings limit | 1 % |
| Employees' contracted-out rebate | 1.6 % |
| Married women's reduced rate between primary threshold and upper earnings limit | 4.85 % |
| Married women's rate above upper earnings limit | 1% |
| Employers' secondary Class 1 rate above secondary threshold | 12.8 % |
| Employers' contracted-out rebate, salary-related schemes | 3.7 % |
| Employers' contracted-out rebate, money-purchase schemes | 1.4 % |
| Class 2 rate | £ 2.40 |
| Class 2 small earnings exception | £ 5,075 per year |
| Special Class 2 rate for share fishermen | £ 3.05 |
| Special Class 2 rate for volunteer development workers | £ 4.75 |
| Class 3 rate | £12.05 |
| Class 4 lower profits limit | £ 5,715 per year |
| Class 4 upper profits limit | £ 43,875 per year |
| Class 4 rate between lower profits limit and upper profits limit | 8 % |
| Class 4 rate above upper profits limit | 1 % |
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The visitors may Click on the image below to visit the HM Revenue & Customs site for detailed up-to-date information.
