National Insurance Contributions

Rates and limits Table D

The percentage rates of NIC remain unchanged. There are small increases in the thresholds and also in the flat rate weekly payments under Classes 2 and 3.

The most striking change is a significant increase in the upper limit at which employee contributions drop from 11% to 1% and self-employed contributions drop from 8% to 1%. It was announced last year that this upper limit is to be aligned with the higher rate income tax threshold, probably in 2009/10. The increase widens the 11% band from £29,615 to £34,605: someone with high earnings will pay £499 extra on salary or £350 extra on self-employed profits as a result in 2008/09.

Table D - Rates and limits for 2008/09

Class 1	Weekly	Monthly	Yearly
Primary Threshold - employees	£105	£453	£5,435
Upper Earnings Limit - employees	£770	£3,337	£40,040
Secondary Threshold - employers	£105	£453	£5,435

Employer's Contribution	Contracted In	Contracted Out
		Salary Related Scheme	Money Purchase Scheme
On earnings up to threshold	Nil	Nil	Nil
On earnings between threshold and upper earnings limit	12.8%	9.1%	11.4%
On earnings above upper earnings limit	12.8%	12.8%	12.8%

Employee's Contribution

Contracted in: 11% on earnings between lower and upper limits, 1% above upper limit.

Contracted Out: 9.4% on earnings between lower and upper limits, 1% above upper limit.

Earnings over £90 per week qualify for benefit, and must be reported under PAYE, but no NICs are payable until earnings exceed £105 per week.

The reduced Class 1 rate payable by certain married women and widows is 4.85% for earnings between £105 and £770 per week, 1% above £770 per week.

Class 2 (Self-employed)	Earnings over £4,825 per year	£2.30 per week
Class 3 (Voluntary)	No limit applicable	£8.10 per week
Class 4 (Self-employed)	Profits between £5,435 and £40,040	8%
	Profits above £40,040	1%

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