Abolition of employer National Insurance contributions for under 21s: examples
Published 5 December 2014
© Crown copyright 2014
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This publication is available at https://www.gov.uk/government/publications/employer-national-insurance-contributions-for-under-21s/abolition-of-employer-national-insurance-contributions-for-under-21s-examples
Before working through these examples, please read the employer guide.
The examples below use the rates that apply for the 2015 to 2016 tax year.
A monthly paid employee is under the age of 21 at the time earnings of £1,600 are paid. The earnings fall above both the monthly, primary and secondary thresholds but beneath the monthly Upper Earnings Limit (UEL) and Upper Secondary Threshold (UST).
| Primary | £1,600 - £672 = £928 x 12% | = £111.36 |
| Secondary | £1,600 - £676 = £924 x 0% | = £0 |
| Total NICs due | = £111.36 |
A monthly paid employee is under the age of 21 at the time earnings of £4,000 are paid. The earnings fall above the monthly UEL and UST.
| Primary | £4,000 - £3,532 = £468 x 2% plus £3,532 - £672 = £2,860 x 12% |
=£9.36 =£343.20 |
| Secondary | £4,000 - £3,532 = £ 468 x 13.8% plus £3,532 - £676 = £2,856 x 0% |
=£64.58 = £0 |
| Toatl NICs due | = £417.14 |
A monthly paid employee is under the age of 21 at the time the earnings of £2,300 are paid and is a member of his employers contracted out salary related pension scheme. The earnings are above the primary and secondary threshold but below the UEL and UST.
| Primary | £2,300 - £672 = £1,628 x 12% less £2,300 - £486 = £1,814 x 1.4% |
= £195.36 = minus £25.40 |
| Secondary | £2,300 - £676 = £1,624 x 0% less £2,300 - £486 = £1,814 x 3.4% |
= £0 = minus £61.68 |
| Total NICs due | = £108.28 |
The abolition of secondary National Insurance contributions (NICs) on earnings below the UST for those employees under the age of 21 does not alter any of the rules for assessing Class 1 NICs.