Earners pay National Insurance contributions (NICs) on their earnings. Employers pay employer contributions for each employee and collect and forward their employees' contributions.
Paying NICs ensures the earner's entitlement to various benefits, including the state pension. Employers should understand their National Insurance obligations and the opportunities to reduce the cost.
There are five classes of NICs. Employers are only concerned with Class 1, 1A and sometimes 1B. Class 2 and 4 apply to the self-employed. Class 3 are voluntary contributions paid by those who may not currently have to pay NICs or are not entitled to receive National Insurance credits.
The rates and allowances given below apply for the tax year 2019/20 unless otherwise stated.
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