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National Insurance Contributions

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2015/16Employee
(primary)
Employee
(secondary)
Class 1 not contracted out
Payable on weekly earnings of
Below £112 (lower earnings limit) Nil -
£112 - £155 (primary threshold) *0% -
Up to £156 (secondary threshold) - Nil
Above £156 - 13.8%
£155.01- £815 (upper earnings limit) **12% -
£156.01 - £815 (upper secondary threshold
under 21s)
12% 0%
Above £815 **2% -

*No NICs are actually payable but a notional Class 1 NIC is deemed to have been paid; this protects contributory benefit entitlement.
**Over state pension age, the employee contribution is generally nil.

Employment allowance up to £2,000 (per year)

Class 1A On relevant benefits 13.8%
Class 2 Self employed £2.80 per week
Small profits threshold £5,965 per annum
Class 3 Voluntary £14.10 per week
Class 4 Self employed on annual profits
£8,060 - £42,385 *9%
Excess over £42,385 *2%

*Exemption applies if state pension age was reached by 6 April 2015.

Apprentices

Employer NICs up to the upper secondary threshold for apprentices aged under 25 will be abolished from April 2016.

Changes to the Employment Allowance

From April 2016 the Employment Allowance will increase to £3,000. However, companies where the director is the sole employee will no longer be able to claim this allowance.

Upper Earnings Limit

It was announced that the NICs Upper Earnings Limit will increase to remain in line with the income tax higher rate threshold, which will rise to £43,000 in 2016/17 and to £43,600 in 2017/18.

Class 2 and Class 4 NICs

The Government has previously announced its intention to abolish Class 2 NICs and reform Class 4 NICs to introduce a new benefit test. The Government will consult on the detail and timing of these reforms later in 2015.

This Budget Report was prepared immediately after the Chancellor's Budget Statement based on official press releases and supporting documentation. The Budget proposals are subject to amendment before the Finance Act receives Royal Assent. This Report is for guidance only, and professional advice should be obtained before acting on any information contained herein. No responsibility can be accepted by the publishers or the distributors for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.