Unless your earnings are very low, you are liable to pay Class 2
National Insurance Contributions if you are self-employed. Class
4 contributions may also be due on our profits.
If you employ staff, both you and your
employees will pay Class 1 National Insurance, unless your earnings
are very low.
"Earnings" for NICs purposes
include all cash remuneration. They are also payable on sick pay,
holiday pay, etc. They are assessed on an individual's pay before
pension contributions and before any charitable donations made
under the payroll deduction scheme.
In addition to the "primary contributions"
paid by the employee, employers are also required to pay "secondary
contributions". There is no ceiling on the amount of an employee's
earnings that will attract secondary contributions.
2011/12 Class 1 (employed) contracted in rates
Employee
Employer
Earnings per week
%
Earnings per week
%
Up to £139
Nil*
Up to £136
Nil*
£139.01 - £817
12
Over £136
13.8
Over £817
2
* Entitlement to contribution-based benefits retained for earnings between £102 and £139 per week.
Class 1A (employers)
13.8% on employee taxable benefits
Class 1B (employers)
13.8% on PAYE Settlement Agreements
Class 2 (self-employed)
flat rate per week £2.50
small earnings exception p.a. £5,315 p.a.
Class 3 (voluntary)
flat rate per week £12.60
Class 4 (self-employed)
9% on profits between £7,225 and £42,475 plus 2% on profits over £42,475
