Class 1 and Class 1A National Insurance contributions

Introduction

Class 1 National Insurance contributions (NICs) are paid by employed people and their employers. If you're an employer, you'll need to collect employee contributions out of staff wages or salary.

The employee's (primary) contribution is deducted from an employee's salary and paid to HM Revenue & Customs (HMRC).

The employer's (secondary) contribution is paid by the employer (or those treated as employers if an actual employer is out of the country) to HMRC.

Class 1 NICs are calculated and deducted within an employer's payroll system. A single payment of PAYE (Pay As You Earn) tax and Class 1 NICs is made to HMRC, usually on a monthly basis. You should be aware that NICs for directors are calculated differently.

Taxable benefits for employees, for example, a company car, may also require payment of Class 1A contributions. These are paid by the employer at the employer's Class 1 secondary rate on the taxable value of any benefit.

This guide explains how to calculate and pay Class 1 NICs, where to get the necessary forms and the penalties if you get things wrong. It also links to detailed information for employers on Class 1A NICs and dealing with expenses and benefits.

Subjects covered in this guide

• Introduction
• Class 1 National Insurance contribution rates and allowances
• Calculating and managing Class 1 National Insurance contributions
• Class 1 National Insurance contributions for directors
• Directors' bonuses and National Insurance contributions
• Class 1A National Insurance contributions

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