National Insurance Contributions for 2018/19
From 2018/19, an employee will pay National Insurance Contributions (NIC’s) if the employee earns more than £162 a week (or £8424 annually). In the year 2017/18 this amount was £157. Similarly, the Weekly Lower Earnings Limit (LEL) has also been increased to £116 from £113 in 2018/19.
National Insurance is paid by either employees or self-employed who are over 16 and have a certain weekly income. There are different classes of National Insurance, which depends on the earning and status of employment.
| Weekly Thresholds | Tax year 2017 to 2018 | Tax year 2018 to 2019 |
|---|---|---|
| Lower Earnings Limit (LEL) (Employees don’t pay NI but get the benefits of paying) | 113 | 116 |
| Weekly Primary Threshold (PT) (Employees start paying NI) | 157 | 162 |
| Weekly Secondary Threshold (ST) (Employers start paying NI) | 157 | 162 |
| Upper Earnings Limit (UEL) (All employees pay a lower rate of NI above this point) | 866 | 892 |
| Upper Secondary Threshold for under 21s | 866 | 892 |
| Apprentice Upper Secondary Threshold (AUST) for under 25s (Employers of certain apprentices who are under 25 pay zero rate up to this point) | 866 | 892 |
| Employment Allowance (per employer) | 3,000 per year | 3,000 per year |
The National Insurance Contributions rate however remains the same for the year 2018/19.
| Employee’s (primary) Class 1 contribution rates | Tax year 2018 to 2019 | Tax year 2017 to 2018 |
|---|---|---|
| Earnings band | NIC rate (%) | NIC rate (%) |
| Below LEL | 0 | 0 |
| LEL - PT15 | 0 | 0 |
| PT- UEL | 12 | 12 |
| Above UEL | 2 | 2 |
Employers NI Rate
Employers are liable to Class 1 and Class 1A (benefits-in-kind) NICs at 13.8%.
Self-employed National Insurance contributions
| 2018/19 | 2017/18 | |
|---|---|---|
| Small profits threshold – Earnings below this threshold incur no NICs | £6,025 | £6,205 |
| Lower Profits Limit – Earnings up to this limit incur Class 2 NICs | £8,424 | £8,164 |
| Upper Profits Limit | £46,350 | £46,350 |
Class 2 NICs
The weekly rate is flat £2.95 (The government has announced to abolish this from April 2019).
Class 4 (self employed)
| Rate on profits between lower and upper limits | 9% |
| Rate on profits above upper limit | 2% |
Apprenticeship Levy
Employers of companies with a turnover in excess of £3 million per year,are also required to pay Apprenticeship Levy at 0.5%.
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Author
Sumit Agarwal (ACMA ACA India), the Managing Partner of DNS Accountants is a highly respected accountant in Harrow with expertise in helping owner- managed businesses.
