National insurance for employees and employers

Employees pay class 1 National Insurance.

Employers are responsible for deducting income tax and National Insurance from employee’s wages. The employer pays the amounts deducted to HMRC each month. National Insurance for employees has two parts: the employee’s National Insurance Contributions – a deduction from gross pay; and employer’s National Insurance Contributions, a cost borne by the employer in addition to the gross pay.

Example: Adrian earns £1,100 in June 2012. He is paid monthly. The first £633 per month he earns is free of National Insurance. Employee’s National Insurance is deducted from his earning over this limit at 12%, this comes to £56.04. In addition, the employer will have to pay employer’s National Insurance on Adrian’s earnings over £624 per month charged at 13.8%, that is £65.69.

The equivalent weekly limits are £146 per week for employees before National Insurance is due and £144 per week  before employer’s contributions are due (2012-13 rates).

Only working people (and their employers) between the ages of 16 and state retirement age have to pay National Insurance.