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  • Female employees entitled to reduced rate NICs

Female employees entitled to reduced rate NICs

Up until 11 May 1977 some married women or widows could opt to pay Class 1 National Insurance contributions (NICs) at a reduced rate and not to pay Class 2 NICs if self-employed.

Eligible women who applied at the time may still be able to pay Class 1 NICs at this reduced rate.

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Certificates confirming eligibility for reduced rate NICs

In order to be able to pay reduced rate NICs, a female employee must give you a certificate of election issued by the National Insurance Contributions Office (NICO) - part of HM Revenue and Customs (HMRC).

There are three acceptable versions of the certificate of election:

  • CA4139
  • CF383
  • CF380A

However these are subject to the rules set out below.

Form CA4139 or form CF383

You cannot accept either of these forms if one of the following applies:

  • box A or box B shows a date that has passed
  • in any two consecutive years since 6 April 1978, the woman has not earned enough to pay, or be treated as having paid, Class 1 NICs and has not been self-employed

Form CF380A

You can accept form CF380A provided your employee has worked continuously for you since 5 April 1980 and they have paid, or are treated as having paid, reduced rate Class 1 NICs throughout that time.

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Choosing the right reduced rate NICs category letter

If a woman is entitled to pay reduced rate NICs you need to start deducting NICs from her pay using the appropriate National Insurance category letter as described below:

  • use category B unless the employee is a member of a contracted-out pension scheme you operate
  • use category E if she is a member of a contracted-out salary-related (COSR) pension scheme you operate
  • use category G if she is a member of a contracted-out money purchase (COMP) pension scheme you operate

If you keep your employee payroll records using commercial payroll software or HMRC’s free online P11 Calculator tool, you should select category letter B, E or G for the employee in the usual way.

If you update a paper form P11 using HMRC’s online NICs calculator, you should select category letter B, E or G on the calculator each time you need to work out reduced rate NIC deductions.

Downloadable calculators

A set of Basic PAYE Tools is available to download straight to your compute. In addition to the P11 Calculator, the tools include:

  • an employer database on which you can record your employees' details
  • a range of other calculators that work out, for example, statutory payments
  • interactive forms such as P11D working sheets
  • a Learning Zone - including interactive learning material on how to use Basic PAYE Tools

Download Basic PAYE Tools from the Business Link website (Opens new window)

If you work out deductions manually using HMRC’s NICs tables, you should use table B, E or G for any employee entitled to pay reduced rate NICs.

Use HMRC’s online NICs calculator

Download National Insurance contributions Table B (PDF 299K)

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Giving up the right to pay reduced rate NICs

If an employee tells you that she now wishes to pay NICs at the full rate you should:

  • return the certificate of election to her after completing part 2
  • calculate full-rate NICs on your subsequent payments to her

The employee must return the certificate to NICO after completing part 1. If appropriate, she must also send a completed form CF9 (for married women) or CF9A (for widows).

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Losing the right to pay reduced rate NICs

A woman loses the right to pay reduced rate NICs if she:

  • gets divorced
  • has her marriage annulled
  • becomes a widow but is not entitled to certain bereavement benefits after an initial period
  • has not in any two consecutive years since 6 April 1978 had any earnings on which Class 1 NICs were payable or treated as paid and has not been self-employed

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Changing the category letter when reduced rate ends

Changing an employee's category letter is easy to do with HMRC’s online P11 Calculator - you simply amend the employee's NI category letter on her Employee Database record. Most third-party payroll software will allow you to change an employee's profile in a similar way. If using paper methods, select the appropriate category in the usual way.

Download a flowchart to help you work out which category letter to use (PDF 42K)

More about calculating NICs deductions if using paper methods

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