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Class 1 contributions

There are 4 types of Class 1 national insurance contributions:

Class 1 primary contributions

Class 1 secondary contributions

Class 1A contributions

Class 1B contributions

Class 1 NICs are calculated using three levels of earnings, the earnings threshold, the lower earnings limit and the upper earnings limit.

Class 1 primary contributions are paid by employees on their gross earnings.

Class 1 secondary contributions are paid by employers on their employees' gross earnings.

Class 1A contributions are payable by employers on their employees' benefits in kind, such as company cars or private medical insurance.

Class 1B contributions are paid only by employees who have a PAYE Settlement Agreement with HM Revenue & Customs.

Class 1 national insurance contributions are payable for 2006/07 as follows (not contracted out rates):

	Payment Period
	Weekly	Monthly	Yearly
Employees	£	£	£
Nil on first	84	364	4,368
(*) 0% on next	13	56	667
11% on next	548	2,375	28,505
1% over	645	2,795	33,540

Employers
Nil on first	97	420	5,035
12.8% on balance	(no upper limit)

(*) Earnings between the lower earnings limit and the earnings threshold protect an entitlement to basic state pension and other contributory benefits without incurring any actual national insurance liability. Details of such earnings must be kept on form P11 and reported at the end of the year on a form P14.