2024 / 2025 Employer NIC Calculator

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Employer National Insurance Contributions (NICs)

As an employer, you have to contribute a lot more payment than just the salary of your employees. You also have to pay for National Insurance Contributions for each of your employees. So you may be asking, what is National Insurance and what exactly are you obligated to take care of. This article will give you all of the information you need and answer any questions regarding the matter that you may have.

What is National Insurance (NI)?

National Insurance is the fraction of money that the government takes from your earnings to help support state pensions as well as other benefits including Jobseekers Allowance, both Employment and Support Allowance, Maternity Allowance (although not Paternity), and Bereavement Benefits. National Insurance Contributions are more commonly referred to as NIs or NICs and are paid by those who are self employed and employed.

Although it is referred to as a contribution, it is a mandatory payment. As long as you are above the age of 16, below the retirement age, and either employed or self employed, you will have to pay National Insurance Contributions. Once a British citizen has reached the age of 16 they will be given a National Insurance number. Your National Insurance number is needed for you to obtain a job.

National Insurance Classes

• Class 1 NIC - Employee Contributions. Check below for further explanations.
• Class 2 NIC - Self Employment Contributions.
• Class 3 NIC - Voluntary Contributions.
• Class 4 NIC - Self Employment Contributions for those earning over £12,570.

Class 1 National Insurance Contributions

Class 1 Primary: It's employers responsibility to take away any contributions from their employees gross pay (the amount of money they have earned before any tax or other deductions have been taken) for the employees of theirs who are of the age of 16 and above (unless they are above the pensionable age) and who earn £242 and above each week. Class 1 Contributions are paid at a weekly rate of 8% for employees who are earning between £242 and £967 and 2% for those who are earning over £967 per week.

Class 1 Secondary: This is the Contributions that employers are required to pay for their employees. These Contributions are meant for employees that are earning £175 and over and has a current rate of 13.8%. These Contributions are meant additional on top of the Class 1 Primary Contributions.

Class 1A: This National Insurance Contributions on taxable benefits and are provided by the employer and given to the employee. All employers are fully responsible for paying Class 1A National Insurance Contributions, which are all payable for the July in the following year. They are calculated using the same rate as the secondary Class 1 percentage rate, which is 13.8% and is based on the value of benefits which were taxable in the previous tax year.

Class 1B: Unlike the rest of the National Insurance Contributions, Class 1B is paid on an annual basis and is a part of a PAYE Settlement Agreement, otherwise known as a PSA. This National Insurance Contribution is payable based on an unusual or a one off taxable benefit which is given by an employer to an employee, such as something like a birthday present. All employers are fully responsible to pay Class 1B National Insurance Contributions and are to be paid by the 18th of October in the following year, or if their taxes are filed electronically the 22nd of October. These are also calculated using the same rate of the Secondary Class 1 percentage rate, which is 13.8% and is based on the value of benefits which were taxable in the previous tax year. You can take the time to apply to HM Revenue & Customs (HMRC) in writing form describing all of the expenses and other benefits that you would like the PSA to cover.