Contribution Rates for National Insurance Breakdown: Tables A, D, F, H, J, L, M, N, V, and Z Detail Rates for Various Earnings Brackets
The latest edition of the official National Insurance Tables booklet, published by HM Revenue and Customs (HMRC), offers a simplified approach to calculating National Insurance Contributions (NICs) for employees. However, it's essential to note that the booklet does not cover several aspects, such as State Pension information, National Insurance benefits, or contributions for directors of their own companies, Class 2 or Class 3, foreign-earned income, overseas workdays, or the Self-Employed.
To make the most of the tables provided in the booklet, here's a step-by-step guide to calculating NICs for employees:
1. **Identify the Employee's National Insurance Category Letter**: Each employee is assigned a category letter based on their employment status, age, and other factors. The booklet includes tables A, D, F, H, J, L, M, N, V, and Z, each corresponding to different contribution rates and thresholds. For example, Table A is the most common category for employees over 21 paying standard NIC rates, while Tables D, J, L, and Z typically apply to married women and widows entitled to pay reduced or different NIC rates.
2. **Determine the Employee’s Earnings Period and Earnings Amount**: NICs are calculated based on pay periods (weekly or monthly) and the employee’s earnings within those periods.
3. **Use the Correct Table for the Employee’s NIC Category and Pay Period**: Each table contains row and column information to find the amount of contributions payable based on earnings. Find the employee’s weekly or monthly earnings in the appropriate column, read across or down to the row corresponding to the earnings to locate the NICs due.
4. **Calculate Employee (Primary) NICs**: Based on the table, determine the amount to deduct from the employee’s wages for Class 1 primary NICs. These are deducted before paying the employee.
5. **Calculate Employer (Secondary) NICs** (if required): Employers also pay NICs separately based on the employee's pay and category, usually at a different rate. The NIC tables also provide employer contribution amounts.
6. **Apply the Relevant Contribution Rates and Thresholds for 2025/26**: For example, Category A has employee rates of 0% on earnings below £125/week (£533/month), 8% on earnings between £125-£967/week (£533-£4,189/month), and 2% on earnings above £967/week (£4,189/month). Other categories have different rates—for instance, Category J has 2% on earnings above the lower threshold.
A summary table of employee NIC rates by category letter is provided below for easy reference:
| Category | Earnings below lower threshold | Earnings between lower and upper thresholds | Earnings above upper threshold | |----------|-------------------------------|---------------------------------------------|------------------------------| | A | 0% | 8% | 2% | | D | 0% | 2% | 2% | | F | 0% | 8% | 2% | | H | 0% | 8% | 2% | | J | 0% | 2% | 2% | | L | 0% | 2% | 2% | | M | 0% | 8% | 2% | | N | 0% | 8% | 2% | | V | 0% | 8% | 2% | | Z | 0% | 2% | 2% |
These percentages are applied to earnings within the specified bands to calculate NIC amounts. The booklet is designed to simplify calculation by providing exact amounts due based on earnings bands and categories. Employers typically use payroll software that incorporates these tables automatically.
Please remember that the NIC thresholds and rates are updated annually; ensure you use the tables for the correct tax year. Employer NICs start at a lower threshold (e.g., £5,000 per year) and are calculated separately, usually at around 15% for Category A.
If you have access to the official HMRC National Insurance Tables booklet, these tables provide definitive NIC amounts payable for each wage band and category for easy reference. The category letter reflects the type of NICs due and the rates applied.
It's crucial to note that the booklet does not cover National Insurance contributions for contribution table letters C, K, or P, the self-employed, or Class 1A, 1B, and 1C National Insurance contributions. For further information on these topics, consult the relevant HMRC resources or seek professional advice.
In the context of business finance, employers can use the National Insurance Tables booklet, published by HMRC, to calculate and understand National Insurance Contributions (NICs) for their employees, noting that the booklet does not cover certain aspects, such as contributions for directors, Class 2 or Class 3, foreign-earned income, overseas workdays, or the Self-Employed. This booklet offers a simplified approach for calculating employee NICs by identifying the employee's category, determining their earnings period and amounts, using the correct table for their NIC category and pay period, and applying the relevant contribution rates and thresholds. Employers should ensure they use the appropriate NIC tables for the correct tax year, as the thresholds and rates are updated annually.
