Employee reaches State Pension age
Employees over the State Pension age (65 for men and 60 for women - rising to 65 between 2010 and 2020) no longer have to pay employee's NICs on their earnings.
You must still deduct employer's NICs, but for employees over the State Pension age you should deduct these at the non contracted-out rate, even if you operate a contracted-out scheme.
Note that PAYE (Pay As You Earn) deductions do not change when an employee reaches State Pension age.
Checking proof of age
Before you stop deducting employee NICs, you must have seen proof that the employee has reached State Pension age. This proof can be a:
- birth certificate
- passport
- certificate of exception (form CA4140 or CF384) issued by our National Insurance Contributions Office or Department for Work & Pensions (DWP)
Please note that the certificates issued by DWP are sometimes in paper format rather than card, but are equally acceptable for proof of age.
If you use third party payroll software or the P11 Calculator
The P11 Calculator on the Employer CD-Rom will automatically prompt you to update the National Insurance category letter of employees who have reached State Pension age. You should use letter C. If you use third-party payroll software, this should prompt you in the same way.
If you complete a paper form P11
If you're using a paper form P11:
- use National Insurance category letter C if using our NICs calculator to work out your deductions
- use National Insurance contributions Table C if you're working out the deductions manually
Download National Insurance contributions Table C (PDF 222K)
How to complete form P11 using the Employer CD-Rom P11 calculator
