National Insurance Contributions

For employees' NIC, see Employee Taxation.

Self-employed people pay:

* weekly Class 2 contribution of £2.10, unless they claim exception for small earnings (below £4,345).

* Class 4 NIC at 8% of taxable profits between £4,895 and £32,760. Profits over £32,760 will be charged at 1%. This is assessed and paid with the self-assessment income tax on profits.

Class 3 voluntary NIC may be paid at £7.35 per week by someone who is not in work but who wishes to maintain state pension rights.

Annual limits

£ per week	2005-06	2006-07
Lower earnings limit, primary Class 1	£82	£84
Upper earnings limit, primary Class 1	£630	£645
Primary threshold	£94	£97
Secondary threshold	£94	£97
Employees’ primary Class 1 rate between primary threshold and upper earnings limit	11%	11%
Employees’ primary Class 1 rate above upper earnings limit	1%	1%
Employees’ contracted-out rebate	1.6%	1.6%
Married women’s reduced rate between primary threshold and upper earnings limit	4.85%	4.85%
Married women’s rate above upper earnings limit	1%	1%
Employers’ secondary Class 1 rate above secondary threshold	12.8%	12.8%
Employers’ contracted-out rebate, salary-related schemes	3.5%	3.5%
Employers’ contracted-out rebate, money-purchase schemes	1%	1%
Class 2 rate	£2.10	£2.10
Class 2 small earnings exception	£4,345 per year	£4,465 per year
Special Class 2 rate for share fishermen	£2.75	£2.75
Special Class 2 rate for volunteer development workers	£4.10	£4.20
Class 3 rate	£7.35	£7.55
Class 4 lower profits limit	£4,895 per year	£5, 035 per year
Class 4 upper profits limit	£32,760 per year	£33, 540 per year
Class 4 rate between lower profits limit and upper profits limit	8%	8%
Class 4 rate above upper profits limit	1%	1%

Someone who is both employed and self-employed will pay Class 1, Class 2 and Class 4 NIC. It is possible to apply for deferment of Class 4 so that the Class 1 paid on earnings can be taken into account. Class 4 will then be charged at only 1%, and the overall liability will be settled at a later date.