Use the below NI calculator to determine the amount of NI contributions employers have to pay for staff and that employees get deducted from their pay
Download this National Insurance Calculator
Download a free spreadsheet version of this NI calculator. Note that this calculator is for employee NI contributions. If you want to calculate director NI contributions use this directors NI calculator.
Download employers NI calculation excel file
Overview of recent National Insurance changes
In the 2023/24 tax year, National Insurance rates have been lowered, from 12% to 10%, effective 6 January 2024.
In the 2022/23 tax year, National Insurance rates and thresholds have been increased, effective 6 April 2022. Rates increased for both employees and employers by 1.25%, and so did the contribution thresholds. The Health and Social Care levy has been implemented newly that year, and was scrapped again shortly after.
Did you know you can save up to £1,000 in National Insurance per year by using a Salary Sacrifice pension scheme? Find out more here .
How is National Insurance calculated?
This guide walks you through the fundamentals of the employer National Insurance calculation for the latest NI rates and thresholds for 2023/24 and our employer NI calculator takes the stress out of working out your contributions for this year.
In this section, we’ll go over the rules behind the National Insurance contributions calculation, what factors play into it, how contributions have changed in 2022/23 and how they differ between employees and employers. In particular, this article looks at
- National Insurance categories
- National Insurance rates
- National Insurance thresholds
- National Insurance threshold calculator
The National Insurance category
In order to calculate NI deductions correctly, you need to assign an employee the correct National Insurance category.
There are 8 broad employee National Insurance categories, which are dependent on personal factors such as age, marital status and employment history such as having another job, being an apprentice or a veteran.
This table lists the NI categories for 2024 as per gov.uk
| NI Category | Employee Group |
|---|
| A | Category A covers all employees except those in categories B, C, H, J, M, V and Z. Most employees fall under category A |
| B | Married and widowed women who are eligible for reduced NI contributions |
| C | Employees who are over the State Pension age |
| H | Apprentices under the age of 25 |
| J | Employees who are paying their NI contributions through another job |
| M | Employees under the age of 21 |
| V | Army Veterans in their first employment |
| Z | Employees under the age of 21 who are also paying their NI contributions through another job |
Most employees in the UK as of tax year 2023/24 have NI code A, which is the default National Insurance category and applied to anyone who does not fall into any of the other NI categories listed in the below NI category letter table for 2023/24.
Note that the National Insurance number (NINO) has nothing to do with the NI category, as its a random identifier for HMRC for a tax person in the UK, which never changes, while the NI category of a person may change over time.
How to calculate employers National Insurance contributions (NI Class 1)
Calculating employers National Insurance is straightforward: employers pay 0% on income below a certain threshold and 13.8% above that threshold. Use this NI calculation UK formula:
Employers NI = National Insurance rate x Income above NI threshold
For the most common NI classes (A, B, C and J) this threshold is the Secondary Threshold. For certain young employees (H, M) and veterans (V) the income threshold is the much higher Upper Earnings Limit.
National Insurance rates for Employers
Use this table to determine employer National Insurance rates for 2023/24 UK (effective from 6 January 2024). Multiply any earnings above the threshold by the National Insurance rate, shown in the table below, to get the employer National Insurance you need to pay for an employee.
| NI Category | National Insurance rate below threshold | National Insurance rate above threshold |
|---|
| A, B, C, J, H, M, V | 0% | 13.8% |
National Insurance threshold for Employers
Use this table to determine National Insurance thresholds 2023/24 effective from 6 January 2024. Income above these thresholds is subject to employers NI contributions at the NI rate determined above.
| NI category | NI threshold (annually) | NI threshold (monthly) | NI threshold (weekly) |
|---|
| A, B, C, J | £9,100 | £758 | £175 |
| F, I, L, S | £25,000 | £2,083 | £481 |
| H, M, V, Z | £50,270 | £4,189 | £967 |
Table with NI calculations for 2023/24
Below you can see monthly employer and employee NI contributions for the tax year 2023/24 for a range of salaries ranging between £20,000 and £80,000 per year relevant for employees with NI category letters A, B, C and J.
This employee NI calculator has been used to calculate employee NI deductions. These are taking into account the latest NI rates and income thresholds effective from 6 April 2023 onwards.
| Annual Salary | Monthly Employer NI | Monthly Employee NI |
|---|
| £20,000 | £125 | £74 |
| £25,000 | £183 | £124 |
| £30,000 | £240 | £174 |
| £35,000 | £298 | £224 |
| £40,000 | £355 | £274 |
| £45,000 | £413 | £324 |
| £50,000 | £470 | £374 |
| £55,000 | £528 | £384 |
| £60,000 | £585 | £393 |
| £65,000 | £643 | £401 |
| £70,000 | £700 | £409 |
| £75,000 | £758 | £418 |
| £80,000 | £815 | £426 |
National Insurance credits
Employers which had less than £100,000 in employers NI in the past tax year have an annual employment allowance of £5,000 in the 2023/24 tax year, which can be deducted from employers NI when paying HMRC. These National Insurance credits, renew every tax year, as long as you stay below the total NI threshold, subject to change.
Employee benefits and in some cases expenses are also subject to National Insurance
There are a few more things you need to take into considerations in order to account for other income subject to National Insurance, such as benefits and some expenses. There are also more things to considers for directors and PAYE settlement agreements.
Employers Class 1A NI contributions on employee expenses and benefits
National Insurance is also payable on any employee benefits in kind or expenses. Employers must report and pay this particular NI liability at the end of the tax year, or pay it throughout the tax year via payroll.
You must pay NI on benefits such as work phones, accommodation, and bonuses. Note that every expense and benefit is calculated differently, so you need to check on what you’re required to report and pay.
You will need to complete a P11D form for every employee that you have given benefits or expenses to and return it to HMRC. It is possible to deduct and pay class 1A NI through your payroll as long as you remember to register with HMRC before the beginning of the tax year.
NI Contributions for directors of limited companies
Company directors count as employees and therefore are required to pay NI contributions on any income over £9,880. Your NI liability is calculated from annual earnings but is paid in accordance with your payroll schedule.
Even if you’re the only employee of your company and you’re the director, your company will still need to pay employers NI on your salary.
Class 1B NI – PAYE Settlement Agreement (PSA)
A PSA allows employers to make a single payment per year that covers any tax and National Insurance contributions that are due on ‘minor, irregular or impracticable’ employee expenses or benefits. These are known as Class 1B National Insurance contributions. Benefits that are covered include long service incentives, telephone bills, relocation expenses, and shared cars.
The Social Care and Health Levy has been scrapped
Employers should be aware that the Social Care and Health Levy which was supposed to come into force in the tax year starting 6 April 2023 has been scrapped.
How much do I deduct from employee pay for National Insurance contributions (NI Class 1)?
As an employer, you are also responsible for automatically deducting your employees’ NI contributions from their pay as part of NI Class 1 contributions. Most employees are on NI letter A which has a free income threshold of £1,048 and NI rates A consisting of
10% for income between £1,048 and £4,189 per month
2% on income above £4,189
The NI rates and thresholds for 2023/24 are reflected in the NI category letter table below and you can use this NI calculator to determine how much NIC you need to deduct from employee pay based on their income.
| Category Letter | up to £1,048 | £1,048 to £4,189 | Over £4,189 |
|---|
| A, F, H, M, V | 0% | 10% | 2% |
| B, I | 0% | 3.85% | 2% |
| J, L, Z | 0% | 2% | 2% |
Final Thoughts
Once you wrap your head around it, the National Insurance hike, though costly, is straightforward. That being said, with the income thresholds having changed several times in a short period of time, a robust payroll process is necessary.
Your payroll software should be be able to implement the changes to the National Insurance calculation seamlessly. Not only should these changes in NI be reflected automatically, but you should be able to communicate directly with your employees in order to explain and contextualise any National Insurance changes they see on their payslips, which will help you improve the employee experience.
Finally, you may want to explore methods of reducing your NI bill that might benefit both you and your employees.
FAQs about Employer National Insurance
How much National Insurance do I pay?
How much National Insurance you pay is impacted by factors around how much you earn and your employment status. If you are an employee under the State Pension age and earn more than £242 a week you and your employer pay Class 1 NI contributions. They’re automatically deducted by your employer from your pay, and employers pay an additional employer NI contribution on top.
Do employers pay National Insurance in the UK?
Yes, they do. Employers deduct their employees’ National Insurance contributions and pay on their behalf. In addition, employers pay an additional National Insurance contribution on their employees’ earnings above the relevant threshold.
How much NI does an employer pay in the UK?
It depends on the National Insurance category of your employees but for most employees in the tax year 2023/24, employers need to pay a 13.8% contribution on any employee earnings exceeding the secondary threshold, which is £175/week or £758/month.
What percentage is National Insurance?
For employees with NI class A, the NI threshold is £1,048 below which you pay 0%. Between £1,048 and £4,189 employees pay 10% and above that 2% on their income.
Do employers pay NI for employees in the UK?
UK employers are required to deduct their employees’ national insurance contributions as well as paying their own contributions ‘employer national insurance’ on their employees’ earnings.