Information about National Insurance Contributions

NIC for Company Directors

Because company directors are often paid irregularly, they are assessed on an annual basis (not weekly or monthly) which takes into account their total earnings from the start of the tax year.

Employee National Insurance Contributions

Employee NIC is not deducted from the employee’s pay before calculating income tax. Employer contributions are deducted from employer’s profits for tax purposes.

Upper Accruals Point

The main purpose of the Upper Accruals Point (currently £770) is that it establishes the upper level of earnings for S2P calculations and contracting-out rebates.

Employed and Self-Employed

If income/profits from self-employment is more than£7,956, then Class 1, Class 2 and Class 4 apply. Otherwise only Class 1 and Class 4 apply.

Class 1A Benefit In Kind

The calculation for Class 1A benefit in kind = 13.8%

Class 4 National Insurance Contributions

Class 4 NICs are collected under self-assessment twice a year.

Entitlements from Class 2 Contributions

Only class 2 contributions give entitlement to contributory state benefits such as the basic pension but not S2P.