Budget Report - 17 March 2004
National Insurance
| 2004/2005 National Insurance Contributions (NICs) |
| |
2004/05 |
2003/04 |
| Class 1 - not contracted out |
| Lower earnings limit (per week) |
£79 |
£77 |
| Upper earnings limit (per week - employees only) |
£610 |
£595 |
| Primary threshold (per week - employees) |
£91 |
£89 |
| Secondary threshold (per week - employers) |
£91 |
£89 |
Employee rate (on earnings between the primary threshold
and the upper earnings limit) |
11% |
11% |
| Employee rate (on earnings above the upper earnings limit) |
1% |
1% |
| Employer rate |
12.8% |
12.8% |
|
| Class 2 (self-employed flat rate) |
| Per week |
£2.05 |
£2.00 |
| Small earnings exception (per year) |
£4,215 |
£4,095 |
|
| Class 3 (voluntary) |
| Per week |
£7.15 |
£6.95 |
|
| Class 4 (self-employed profit-related) |
Rate (on earnings between the lower
and upper profits limits) |
8% |
8% |
| Rate (on earnings above the upper profits limit) |
1% |
1% |
| Lower profits limit (per year) |
£4,745 |
£4,615 |
| Upper profits limit (per year) |
£31,720 |
£30,940 |
|
Note
1. Employees' contributions are payable on that part of earnings which exceeds the primary threshold. The lower earnings limit no longer has any effect on the employee contributions actually paid but, for the purpose of certain benefit entitlements which depend on contributions, the employee will be treated as having paid contributions on earnings between that figure and the primary threshold.
2. The rates of NICs on earnings below the upper limit are reduced where the employee is contracted out. The reduction for employees is 1.6%. The reduction for employers is 3.5% for salary-related schemes and 1.0% for money-purchase schemes (2003/04: 3.5% and 1.0% respectively).
Details