National insurance contributions

National insurance contributions and rates in 2016/17

Employee   Employer  
Earnings per week   Earnings per week  
Up to £112                         Nil* Up to £156                        0%
From £112.01 to £155                    0% Over £156                       13.8%*
From £155.01 to £827  12% Over state retirement age    13.8%
Over £827                          2%   
Over state retirement age      0%                                       

*0% for employees under 21 and apprentices under 25 on earnings up to £827 per week.

Employment allowance

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

** The rate is 0% in relation to employees under 21 and apprentices under 25 on earnings up to £827 per week

*** Per employer, per year. One claim only for companies in a group or under common control. Not available if the only paid employee is a director.

Class 1A (on relevant benefits) 13.8%
   
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 £43,000 9%
Above £43,000 2%
*Exemption applies if state retirement age was reached by 6 April 2016.
   
Maximum contributions  
Class 1 £4,197.60 + 2% of earnings over £43,000 pa.
Class 2 and Class 4 £3,278.15 + 2% of profits over £43,000 pa.

 

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, or 25 for an apprentice.

2017 and beyond

The employee and employer class 1 national insurance thresholds are to be aligned from April 2017, meaning that both employees and employers will start paying national insurance on weekly earnings above £157.

Autumn Statement 2016 confirmed that self-employed contributory benefit entitlement will instead be accessed through the payment of class 3 or class 4 national insurance contributions. All self-employed women will be able to access the standard rate of maternity allowance.

The government has announced that class 2 national insurance contributions will be abolished from April 2018. At the same time the class 4 will be reformed to introduce a new contributory benefit test.

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's Largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant* face to face.
  • Money back service guarantee. All your telephone calls and emails will be answered the same day or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee of £120 plus VAT per month.

If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com.

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own Limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.