Class 1 National Insurance contributions (NICs) are made up of two components:
If you maintain the paper form P11 Deductions Working Sheet, you'll need to work out how much NICs you need to pay as an employer and how much NICs you need to deduct from each employee's pay. You'll also need to complete the NICs columns on form P11.
You can work out the NICs figures using HM Revenue & Customs (HMRC's) free and easy to use online NICs calculators. You could also work out the NICs using manual tables, but using the calculators will save you time and help reduce errors.
On this page:
Using non-paper methods of completing form P11, like HMRC’s free P11 Calculator or commercial payroll software, can save you time and help reduce errors. Almost all employers must file their starter and leaver information (P45 and P46) and their Employer Annual Return (forms P14 and P35) online and using non-paper methods makes this much easier. Find out more by linking to the related guidance below.
Using commercial payroll software or HMRC’s downloadable P11 Calculator
Whatever method you use to work out NICs, you must make sure that you use the right category letter for the employee. The category letter corresponds with the letter shown in the National Insurance (NI) tables and is also called the NI table letter. It determines the rate of NICs the employee pays and depends on:
The category letter has nothing to do with the letter at the end of the employee's NI number - be careful not to confuse the two.
For most men and women aged between 16 and State Pension age you'll use the category letter A. But always check you're using the right letter - don't just assume that it'll be A. You can use a flowchart on the HMRC website to help you work out which category letter to use.
View a flowchart to help you work out which category letter to use (PDF 42K)
The easiest way to work out the NICs you'll need to deduct from an employee's pay - and how much you'll need to pay as an employer - is to use HMRC’s free online NICs calculator. This will also give you the figures you'll need to put in columns 1a to 1f of form P11.
If you use the calculator you won't need to use the NICs tables or do any calculations yourself. Although you can't save the results from the calculator directly you can copy and paste them into other applications and then save them there.
You'll need the following information to hand to work out NICs using the calculator:
The calculator is easy to use. You just need to choose the length of the pay period (weekly, two weekly, four weekly or monthly), enter the gross pay for NICs purposes for the period and select the employee's category letter.
Note that the gross pay figure you need to use for NICs purposes may not be the same as the one you use for PAYE (Pay As You Earn) tax purposes - because NICs are worked out separately for each pay period on a non-cumulative basis, you don't need to worry about any previous earnings in the tax year. You can find out what to include in gross pay for NICs purposes in HMRC’s publication CWG2, 'Employer Further Guide to PAYE and NICs'.
The calculator will tell you:
Use the NICs calculator on the HMRC website
Download CWG2, 'Employer Further Guide to PAYE and NICs' (PDF 530K)
Special rules apply when you're working out NICs for company directors.
Directors have an annual earnings period. This means that, although you can work out NICs for each pay period in the same way as for other employees, you'll need to recalculate the NICs due on an annual basis at the end of the tax year - or when the person stops being a director if this happens during the tax year.
You'll need to use the separate calculator for directors at the end of the year to reassess their NICs using an annual earnings period. This calculator is on the HMRC website.
If the director's appointed part way through the tax year, the calculator carries out the annual earnings period check on a pro-rata basis from the date they were appointed.
You should only use this calculator to do a reassessment at the end of the tax year or when a directorship ends. Don't use it for any other assessments.
To do the check, you'll need:
The calculator will work out any further employer's and employee's NICs now due.
Use the directors' annual earnings period calculator on the HMRC website
Download HMRC’s publication CA44, 'National Insurance for Company Directors' (PDF 277K)
You can work out the NICs figures manually using National Insurance (NI) tables. But this method is more cumbersome and time consuming than using the calculators and errors are more likely.
You can downloador order copies online- see below.
Before you use the tables it's important to know:
You'll also need to know the employee's gross pay (for NICs purposes) for the pay period - this isn't necessarily the same as gross pay for PAYE purposes. You can find out what to include in gross pay for NICs purposes in HMRC’s publication CWG2, 'Employer Further Guide to PAYE and NICs'.
There are various NI tables for different category letters, as follows:
Download or order NICs tables online
Download CWG2, 'Employer Further Guide to PAYE and NICs' (PDF 530K)
If, for example, your employee's NIC category letter is A, you'd use booklet CA38 as follows:
Important - if your employee's earning are the same as or more than the Lower Earnings Limit (LEL), £102 per week or £442 per month for 2011-12, you must record them on form P11 even if no NICs are actually payable.
Form P11 is like a spreadsheet - it's split into columns and rows. Each row represents a week number - for example, the first week's row represents week 1 and covers the period from 6 April to 12 April inclusive.
The week numbers are grouped into month numbers 1 to 12. So the first four week numbers, for example, are grouped into month 1.
If you pay your employee weekly, start with the row representing the week that includes the first payday.
If you pay your employee monthly, find the month that includes the first payday. Start with the row that represents the week in that month that includes the first payday.
Calculating PAYE deductions for the paper form P11
