EPAPP3 - Classes of National Insurance contributions

The Social Security Contributions and Benefits Act 1992, provides a basic scheme of Social Security which gives entitlement to a range of contributory benefits in return for the payment of compulsory contributions.

There are six classes of National Insurance:

Class 1 – which is an earnings related contribution made up of two parts:

primary contributions payable by employees and office holders as a percentage of their earnings above a prescribed limit
secondary contributions payable by employers as a set percentage of the earnings they pay above the same prescribed percentage.

Class 1A - which is an earnings related contribution payable by employers and others who provide benefits in kind to directors and employees earning over Ł8500. Employees do not pay Class 1A contributions.
Class 1B – which is an earnings related contribution payable by employers who enter into PAYE Settlement Agreements (PSAs) for tax. Employees do not pay Class 1B contributions.
Class 2 – which is a flat rate weekly contribution payable by the self employed.
Class 3 – which is a voluntary contribution payable by persons who are not otherwise liable to pay contributions.
Class 4 – which is a profit related contribution payable by the self employed in addition to Class 2 contributions.

Detailed guidance on all six classes of National Insurance contributions is available in the National Insurance Manual (NIM).

Top of Page

Manual Contents

Information about this page - link will open in a new window