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NATIONAL INSURANCE CONTRIBUTIONS

8th March 2017 BUDGET PROPOSALS
AND CHANGES FOR 2017/2018 previously announced
(Subject to details in the Finance Bill)
Ellis Atkins have taken all due care in the presentation of these notes. No responsibility for loss occasioned to any person or company acting or refraining from action as a result of any material in these notes can be accepted by Ellis Atkins, its partners or staff. Please contact us or your own professional advisor for advice specific to your circumstances.

Revised contributions take effect from 6th April 2017.

Class 1 Contributions

Employees earning over £8,164 (was £8,060) per annum will pay 12% on the excess up to earnings of £866 per week, plus an additional 2% on the excess over £45,000 with no upper limit.

Employers will pay 13.8% on all earnings over £8,164 per annum.

Class 2 Contributions

The Class 2 rate for the self-employed is increased to £2.85 per week. The small earnings exception is increased to £6,025 per annum. Please note that the Class 2 rate is to be abolished entirely from 6 April 2018.

Class 4 Contributions

The Class 4 rate of 9% will be charged on profits between £8,164 and £45,000 plus an additional 2% on all profits above £45,000. Class 4 national insurance contributions will be increased from 9% to 10% from 6 April 2018 and to 11% from 6 April 2019.

Most taxable benefits provided by employers will be liable to Class 1A national insurance at 13.8%.

Employers are entitled to claim the Employer Contributions Allowance up to a maximum of £3,000. The allowance is not available where the only employee is a director.

From April 2018 employers will pay Employers national insurance contributions on termination payments above £30,000 where income tax is also due.