Class 1 Contributions

Employed earners and their employers pay Class 1 contributions.

Class 1 contributions are earnings related and are made up of two elements:

  • the employee's contribution (primary contribution)
  • and the employer's contribution (secondary contribution)

An employee is liable to pay contributions if they:

  • are aged 16 or over, and under State Pension age (currently 65 for men, 60 for women)
  • earn more than the Earnings Threshold, (ET)

Employees pay contributions on all of their earnings above the ET. They pay at a main percentage rate on earnings up to the Upper Earnings Level (UEL) and at a lower percentage rate on all earnings above the UEL. Use this link to find the latest information on the rates.

An employer is liable to pay contributions on all their employee's earnings above the ET, if the employee

  • is aged 16 or over, and
  • earns more than the ET.

Some people do not work for an employer in the UK, and are not attached to another UK business responsible for operating National Insurance on their behalf. These people have to account for their own Class 1 contributions through a NI only Direct Collection scheme. You should contact your local HMRC office to set this up.

If you're an employee, your employer will collect your Class 1 National Insurance contributions out of your earnings via the Pay as You Earn (PAYE) scheme. The Class 1 contributions and tax paid are passed to HM Revenue and Customs who are responsible for the update of individual's National Insurance records.

HMRC allocate Category letters to the Class 1 National Insurance Contributions received. More information can be found on Category Letters.

If you are a Mariner and would like more information please see National Insurance for Mariners - Employers and payers of wages.

There are special National Insurance rules for people who travel outside the UK and for people who come to the UK from Abroad. For further information please see Coming to work in the UK and working overseas.

Some people may have to pay Class 1 contributions as employees on earnings, which are also included in the trading profits, which form the basis of their Class 4 contributions.

The payment of Class 1 National Insurance Contributions gives entitlement to a range of contributory benefits.

The benefits are:

For information about any of these benefits - you can contact your nearest Jobcentre Plus office, or visit the Directgov website.

A list of Find out more in the guide 'Employee tax and National Insurance' is available should you require them.