National Insurance Thresholds

The amount of National Insurance you pay depends on how much you are paid each payday. This is different from income tax. Income tax uses an annual limit for each tax year. For National Insurance, your pay is compared to a number of different ‘limits’ to see how much National Insurance you pay. If you are normally paid weekly, then a weekly limit is used. If you are normally paid monthly, then a monthly limit is used. For simplicity, we use weekly limits in our examples. The main limits are:

a)    The Lower Earning Limit (or LEL)

If you earn between £107 and £146 per week (in 2012/13) you will get National Insurance ‘credits’ – that is you will be entitled to some basic National Insurance benefits, but won’t actually pay any National Insurance.

Example: Lottie earns £96 per week in one job and £115 per week in a second job. Neither Lottie nor her employers pay National Insurance. But because her earnings are over £107 per week in the second job, Lottie will gain basic state benefit rights from this second job.

b)    The Primary Threshold (sometimes called the Primary Earnings Threshold)

If you earn between £146 and £817 per week (in 2012/13), then you will pay the standard rate of National Insurance (12% in 2012/13) on your earnings over £146 per week.

E.g. John earns £190 in one week in July 2012. He pays no National Insurance on the first £146, and 12% on the next £44.  (That is £5.28).

c)    The Secondary Threshold (sometimes called the Secondary Earnings Threshold)

If you earn over £144 per week (in 2012/13), then your employer will pay the standard rate of employer’s National Insurance on these earnings (13.8% in 2012/13). This is in addition to the employee’s contributions (which are due on earnings over £146 per week).

E.g. John earns £190 in one week in July 2012. He pays £5.28 in National Insurance on his earnings over £146 (as above). His employer also pays 13.8% on  the earnings over £144 per week, that is £46 – a sum of £6.35.

d)    The Upper Earnings Limit (or UEL)

(£817 per week for 2012/13). For high earners who are paid £817 per week or more, the National Insurance rate falls. On earnings above this limit, the employee pays a lower rate ( 2% in 2012/13). The employer continues to pay the standard rate of employer’s National Insurance on these earnings (13.8% in 2012/13).

E.g. Alison earns £950 in one job in week during August 2012. She pays 12% National Insurance on her earnings between £146 per week and £817 per week. In addition, she pays 2% National Insurance on her earnings over £817 per week. Her total National Insurance is £950 – 817 = £133 at 2% = £2.66; plus £817 – 146 = £671 at 12% = £80.52; a total of £83.18.

e)    The Upper Accruals Point

This is £770 per week for 2012/13. Earnings above this limit do not count towards the second state pension

f)    Lower Earnings Limit

If your earnings in any job are less than the Lower Earnings Limit (£107 per week for 2012/13), then you will pay no National Insurance and you will earn no National Insurance benefit rights.