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.
Class 1 (employed)
contracted in
2010/11 Rates
Weekly earnings
Employer
Employee
Up to £110
Nil*
Nil*
£110.01 - £844
12.8%**
11%**
Over £844
12.8%**
£80.74 +1%***
* Entitlement to contribution-based benefits retained for earnings between £97.01 and £110 per week.
** On earnings above £110.
*** On earnings above £844.
Class 1A (employers)
12.8% on employee taxable benefits
Class 1B (employers)
12.8% on PAYE Settlement Agreements
Class 2 (self-employed)
flat rate per week £2.40
small earnings exception p.a. £5.075 p.a.
Class 3 (voluntary)
flat rate per week £12.05
Class 4 (self-employed)
8% on profits between £5,715 and £43,875 plus 1% on profits over £43,875
