National Insurance Thresholds

National insurance for employees and employers

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 the Lower Earning Limit and the Primary Threshold 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. These limits are respectively £111 and £153 per week in 2014/15; £109 and £149 per week for 2013/14.

Example:  During 2014/15, 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 £111 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 the Primary Threshold and the Upper Earnings Limit, then you will pay the standard rate of National Insurance (12% in 2014/15 and 2013/14) on your earnings over the Primary Threshold. The Primary Threshold is £153 per week for 2014-15 and £149 per week in 2013-14. The Upper Earning Limit is £805 per week for 2014/15 and £797 per week in 2013-14.

E.g. John earns £190 in one week in July 2014. He pays no National Insurance on the first £153 and 12% on the next £37.  (That is £4.44).

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

If you earn over the Secondary Earnings Threshold then your employer will pay the standard rate of employer’s National Insurance on these earnings (13.8% in 2014/15 and 2013/14). This limit is £153 per week in 2014-15 and £148 per week in 2013-14. This is in addition to the employee’s contributions (which are due on earnings over the Primary Threshold  – £153 per week in 2014-15 and £149 per week in 2013-14).

E.g. John earns £190 in one week in July 2014. He pays £4.44 in National Insurance on his earnings over £153 (as above). His employer also pays 13.8% on  the earnings over £153 per week, that is on £37 – a sum of £5.10.

d)    The Upper Earnings Limit (or UEL)

(£805 per week for 2014-15 and £797 for 2013-14). For high earners who are paid over the Upper Earnings Limit, the National Insurance rate falls. On earnings above this limit, the employee pays a lower rate ( 2% in 2014/15 and 2013-14). The employer continues to pay the standard rate of employer’s National Insurance on these earnings (13.8% in 2014/15 and 2013-14).

E.g. Alison earns £950 in one job in week during August 2014. She pays 12% National Insurance on her earnings between £153 per week and £805 per week. In addition, she pays 2% National Insurance on her earnings over £805 per week. Her total National Insurance is £950 – 805 = £145 at 2% = £2.90; plus £805 – 153 = £652 at 12% = £78.24; a total of £81.14.

e)    The Upper Accruals Point

This is £770 per week for 2014/15 and 2013-14 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 (£111 per week for 2014/15; £109 per week for 2013-14), then you will pay no National Insurance and you will earn no National Insurance benefit rights.

TaxAid Tip

As state pension age rises, check your employer know the right date to stop your National Insurance deductions.

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