National Insurance: the basics
National Insurance contributions for employers and employees
Different types of National Insurance contributions (NICs) are
calculated and collected in different ways, with differing responsibilities
for how they are calculated and paid.
Class 1 NICs
Employers are responsible for calculating, deducting and paying
Class 1 primary NICs, or employees' contributions,
to HM Revenue & Customs on behalf of all employees, including
directors, earning above the earnings threshold.
These must be deducted from their salary.
Employers must also calculate and pay Class 1 secondary
NICs, or employers' contributions, for all employees earning
above the earnings threshold. And employers must keep adequate records
showing how their NICs were calculated and what payments have been
made for each employee. See our guide on Class 1 National
Insurance contributions.
Class 1A NICs
Employers must calculate and pay Class 1A NICs due on taxable benefits
given to employees, such as company cars or health insurance. These
must be declared on form P11D annually and a copy given to the relevant
employee by 6 July after the end of the tax year - download
form P11D from the HM Revenue & Customs website (PDF).
See our guide on Class 1A National Insurance contributions.
Class 1B NICs
These are only paid by employers who have a PAYE Settlement Agreement
with HM Revenue & Customs.
Class 3 NICs
These are paid voluntarily by individuals who want to protect their
right to certain benefits, for which they have not yet made sufficient
contributions. Individuals are responsible for finding out if they
need to pay Class 3 NICs and for setting up a method of payment.
See our guide on Class 3 National Insurance contributions.
Subjects covered in this guide
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