National insurance for employees and employers

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 £1,000 in June 2014. He is paid monthly. The first £663 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 £40.44. In addition, the employer will have to pay employer’s National Insurance on Adrian’s earnings over £663 per month charged at 13.8%, that is £45.50.

The equivalent weekly limits (at 2014-15 rates) are £153 per week (£149, 2013-14) for employees before National Insurance is due and £153 per week (£148, 2013-14) before employer’s contributions are due .

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

TaxAid Tip

The state retirement is rising.  It is important to check the date you become entitled to your state pension and tell your employer if you think National Insurance is being deducted when you are not liable to pay.

TaxAid helpline

Our helpline offers professional, free, confidential advice to people on low incomes