Asked about UK National Insurance Contributions (NIC) for self-employed individuals or employers.
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Fix the tax year and the person's status
Confirm the tax year (2024-25, 2025-26, or 2026-27), the status (self-employed only, employed, employer, or dual employed-and-self-employed), and the numbers you need (net self-employment profits for Class 4, gross payroll for Class 1). Do not compute without the year and profits, because the employer rate and threshold changed in April 2025.
Watch for: Rates differ materially by year, so an unknown year or unknown profit level is a stop-and-ask, not a guess.
Identify which NIC classes apply
From the status, list the classes in scope. Employment earnings carry Class 1 employee (deducted at source) and Class 1 employer (on payroll). Self-employment profits carry Class 4, plus Class 2 as voluntary only. A dual-status person can have Class 1 and Class 4 at the same time. Escalate non-residents, and special categories such as mariners, share fishermen, and ministers, rather than computing.
Watch for: Class 2 has been voluntary since 6 April 2024, so it is never automatically compulsory.
National Insurance Contributions (Reduction in Rates) Act 2024
Every figure is drawn from this Tax Guide and cited to its source.
Weekly rate
£3.50 (voluntary from 6 April 2024)Finance Act 2024
Annual cost
£182.00Calculated
Small Profits Threshold
£6,845SSCBA 1992
Main rate
6% on £12,570 – £50,270SSCBA 1992
Additional rate
2% above £50,270SSCBA 1992
LPL
£12,570SSCBA 1992
UPL
£50,270SSCBA 1992
3-year comparison table
| Field | 2024-25 (Prior) | 2025-26 (Current) | 2026-27 (Forthcoming) | |---|---|---|---| | **Class 1 employee main rate** | 8% (from 6 Apr 2024; was 10%) | 8% | 8% | | **Class 1 employee additional rate** | 2% above UEL | 2% | 2% | | **Class 1 employer rate** | 13.8% | **15%** | 15% | | **Secondary Threshold (employer)** | £9,100/yr (£175/wk) | **£5,000/yr (£96/wk)** | £5,000/yr | | **Primary Threshold (employee)** | £12,570/yr | £12,570/yr | £12,570/yr | | **Upper Earnings Limit (UEL)** | £50,270/yr (£967/wk) | £50,270/yr | £50,270/yr (frozen to 2027-28) | | **Employment Allowance** | £5,000 | **£10,500** | £10,500 | | **Class 2 status** | Abolished (voluntary only) | Abolished (voluntary only) | Abolished (voluntary only) | | **Class 2 voluntary weekly rate** | £3.45 | £3.50 | TBC (Autumn 2026) | | **Small Profits Threshold (SPT)** | £6,725 | £6,845 | TBC | | **Class 4 main rate** | 6% (from 6 Apr 2024; was 9%) | 6% | 6% | | **Class 4 additional rate** | 2% above UPL | 2% | 2% | | **Class 4 Lower Profits Limit (LPL)** | £12,570 | £12,570 | £12,570 | | **Class 4 Upper Profits Limit (UPL)** | £50,270 | £50,270 | £50,270 | | Country | United Kingdom | | | | Primary Legislation | Social Security Contributions and Benefits Act 1992 (SSCBA 1992); National Insurance Contributions (Reduction in Rates) Act 2024; Autumn Budget 2024 (Class 1 employer changes); Autumn Budget 2025 (no change) | | | | Tax Authority | HM Revenue & Customs (HMRC) | | | | Currency | GBP only | | | | Contributor | Open Accountants | | | | Validated by | Verified by James Power on 2026-06-03 | | | | Validation date | Verified by James Power on 2026-06-03 | | |
Reviewed against the cited tax authorities by James Power on 2026-06-03.
Items flagged for further clarification are tracked separately and excluded here.
This block is generated from verified skill_facts — edit the facts, not the prose.
Read this whole section before computing or classifying anything. This skill covers three tax years: the Prior year (2024-25), the Current year (2025-26), and the Forthcoming year (2026-27).
3-year comparison table
| Field | 2024-25 (Prior) | 2025-26 (Current) | 2026-27 (Forthcoming) |
|---|---|---|---|
| Class 1 employee main rate | 8% (from 6 Apr 2024; was 10%) | 8% | 8% |
| Class 1 employee additional rate | 2% above UEL | 2% | 2% |
| Class 1 employer rate | 13.8% | 15% | 15% |
| Secondary Threshold (employer) | £9,100/yr (£175/wk) | £5,000/yr (£96/wk) | £5,000/yr |
| Primary Threshold (employee) | £12,570/yr | £12,570/yr | £12,570/yr |
| Upper Earnings Limit (UEL) | £50,270/yr (£967/wk) | £50,270/yr | £50,270/yr (frozen to 2027-28) |
| Employment Allowance | £5,000 | £10,500 | £10,500 |
| Class 2 status | Abolished (voluntary only) | Abolished (voluntary only) | Abolished (voluntary only) |
| Class 2 voluntary weekly rate | £3.45 | £3.50 | TBC (Autumn 2026) |
| Small Profits Threshold (SPT) | £6,725 | £6,845 | TBC |
| Class 4 main rate | 6% (from 6 Apr 2024; was 9%) | 6% | 6% |
| Class 4 additional rate | 2% above UPL | 2% | 2% |
| Class 4 Lower Profits Limit (LPL) | £12,570 | £12,570 | £12,570 |
| Class 4 Upper Profits Limit (UPL) | £50,270 | £50,270 | £50,270 |
| Country | United Kingdom | ||
| Primary Legislation | Social Security Contributions and Benefits Act 1992 (SSCBA 1992); National Insurance Contributions (Reduction in Rates) Act 2024; Autumn Budget 2024 (Class 1 employer changes); Autumn Budget 2025 (no change) | ||
| Tax Authority | HM Revenue & Customs (HMRC) | ||
| Currency | GBP only | ||
| Contributor | Open Accountants | ||
| Validated by | Verified by James Power on 2026-06-03 | ||
| Validation date | Verified by James Power on 2026-06-03 |
Conservative defaults
| Ambiguity | Default |
|---|---|
| Unknown tax year | Ask -- rates differ materially between 2024-25, 2025-26, and 2026-27 (especially employer NIC) |
| Unknown employment status | Ask -- dual status affects annual maximum cap |
| Unknown profit level | Do not compute -- profits are required |
| Unknown whether client wants voluntary Class 2 | Recommend if profits below SPT and client needs qualifying years |
| Unknown state pension record | Flag for reviewer |
| Unknown age (state pension age) | Ask -- over state pension age = no Class 4 |
| Unknown payroll size for Employer NIC | Ask -- Employment Allowance depends on prior-year secondary Class 1 < £100k and connected-company rules |
This is the deterministic pre-classifier for bank statement transactions related to NIC. When a transaction matches a pattern below, apply the treatment directly.
How to read this table. Match by case-insensitive substring on the counterparty/reference. NIC payments always EXCLUDE from any VAT classification -- they are statutory personal obligations (Class 2/4) or employer payroll obligations (Class 1 employer).
HMRC Self Assessment payments patterns
| Pattern | Treatment | Notes |
|---|---|---|
| HMRC, HM REVENUE, HM REVENUE & CUSTOMS | EXCLUDE -- tax/NIC payment | Self Assessment payments include income tax + Class 4 NIC + voluntary Class 2 |
| HMRC SELF ASSESSMENT | EXCLUDE -- SA payment | Combined tax and NIC |
| HMRC NDDS, HMRC SHIPLEY | EXCLUDE -- SA payment | HMRC processing centres |
| SELF ASSESSMENT, SA PAYMENT | EXCLUDE -- SA payment | Generic SA reference |
Class 2 direct debits patterns
| Pattern | Treatment | Notes |
|---|---|---|
| HMRC NIC, HMRC CLASS 2 | EXCLUDE -- voluntary Class 2 | Monthly or quarterly direct debit for Class 2 |
| NATIONAL INSURANCE, NAT INS | EXCLUDE -- NIC payment | Generic NI reference |
| NIC DIRECT DEBIT, NIC D/D | EXCLUDE -- Class 2 DD | Voluntary Class 2 via direct debit |
HMRC PAYE payments patterns
| Pattern | Treatment | Notes |
|---|---|---|
| HMRC PAYE, PAYE NIC, HMRC CUMBERNAULD | EXCLUDE -- PAYE payment | Combined PAYE income tax + Class 1 employee + Class 1 employer + Apprenticeship Levy |
| 1025 (followed by UTR) | EXCLUDE -- SA payment | HMRC Self Assessment payment reference format (1025 + 10-digit UTR) |
Student loan and other SA components patterns
| Pattern | Treatment | Notes |
|---|---|---|
| STUDENT LOAN, SLC | EXCLUDE -- student loan repayment | Not NIC -- see uk-student-loan-repayment skill |
| HMRC (large combined payment) | EXCLUDE -- combined SA | May include income tax + Class 4 + Class 2 + student loan; cannot split from bank statement alone |
Employer Class 1 payroll context patterns
| Pattern | Treatment | Notes |
|---|---|---|
| SALARY, WAGES (incoming credit) | Not self-employed NIC | Employment income -- Class 1 deducted at source by employer |
| EMPLOYER NIC | Employer's Class 1 obligation | 13.8% (2024-25) or 15% (2025-26 / 2026-27) on earnings above ST |
Input line:
31.01.2027 ; HMRC SELF ASSESSMENT ; DEBIT ; SA BALANCING PAYMENT ; -4,200.00 ; GBP
Reasoning: Matches "HMRC SELF ASSESSMENT" (pattern 3.1). This is the 31 January balancing payment for tax year 2025-26. Includes income tax, Class 4 NIC, and possibly Class 2 voluntary. Cannot split NIC from income tax on the bank statement alone. Exclude from VAT. The SA302 tax calculation will show the NIC breakdown.
Classification: EXCLUDE -- SA payment (combined tax and NIC). Request SA302 to determine NIC component.
Input line:
31.07.2026 ; HMRC NDDS ; DEBIT ; PAYMENT ON ACCOUNT ; -2,100.00 ; GBP
Reasoning: Matches "HMRC NDDS" (pattern 3.1). This is the second payment on account for 2025-26, due 31 July 2026. Includes 50% of prior year Class 4 liability and income tax. Exclude from VAT.
Classification: EXCLUDE -- SA payment on account.
Input line:
15.03.2026 ; HMRC NIC ; DEBIT ; CLASS 2 NIC MAR ; -15.17 ; GBP
Reasoning: Matches "HMRC NIC" (pattern 3.2). Amount approximately £3.50/week x 4.33 weeks = £15.17 monthly. Voluntary Class 2 payment via direct debit. Client has profits below SPT and is paying voluntarily for state pension qualifying years.
Classification: EXCLUDE -- voluntary Class 2 NIC. Not deductible from profits (Class 2 is not a trading expense).
Input line:
28.02.2026 ; ACME LTD SALARY ; CREDIT ; FEB SALARY ; +3,200.00 ; GBP
Reasoning: This is employment income received. Class 1 NIC has already been deducted by the employer at source. This is NOT a self-employment NIC payment.
Classification: NOT NIC -- employment income. Class 1 deducted at source.
Input line:
31.01.2027 ; HM REVENUE & CUSTOMS ; DEBIT ; SELF ASSESSMENT ; -8,500.00 ; GBP
Reasoning: Matches "HM REVENUE & CUSTOMS" (pattern 3.1). Large SA payment that likely combines income tax + Class 4 NIC + possibly Class 2 + student loan repayment. Cannot split components from bank statement. Need SA302 for breakdown.
Classification: EXCLUDE -- combined SA payment. Request SA302 for NIC/tax/student loan split.
Input line:
15.04.2027 ; HMRC ; CREDIT ; SA REPAYMENT ; +650.00 ; GBP
Reasoning: This is a CREDIT from HMRC -- a repayment of overpaid SA (may include overpaid NIC). Exclude from VAT.
Classification: EXCLUDE -- SA refund. Not taxable income. Request SA302 for breakdown.
Scenario: A small employer pays one employee a gross salary of £35,000 per year. Show the employer Class 1 NIC cost in 2024-25 (13.8% / ST £9,100) versus 2025-26 (15% / ST £5,000), and net of Employment Allowance.
Employer NIC comparison table
| Component | 2024-25 (Prior) | 2025-26 (Current) |
|---|---|---|
| Gross salary | £35,000.00 | £35,000.00 |
| Secondary Threshold (ST) | £9,100 | £5,000 |
| Earnings above ST | £25,900 | £30,000 |
| Employer NIC rate | 13.8% | 15% |
| Gross employer NIC | £3,574.20 | £4,500.00 |
| Employment Allowance offset (single-director companies excluded) | up to £5,000 | up to £10,500 |
| Employer NIC after Employment Allowance (if eligible) | £0 (£3,574.20 fully absorbed) | £0 (£4,500.00 fully absorbed) |
| Employer NIC if NOT eligible for EA | £3,574.20 | £4,500.00 |
Real-world impact:
Reviewer flag: Confirm Employment Allowance eligibility (employer's secondary Class 1 in the prior tax year was below £100,000, not a single-director-only company, and not the connected company in a group that already claims).
Class 4 across 3 years table
| Year | Profits | Class 4 calc | Class 4 NIC |
|---|---|---|---|
| 2024-25 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 |
| 2025-26 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 |
| 2026-27 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 |
Class 4 rates and thresholds are unchanged across all three years. Class 2 treated as paid (profits > SPT) in all years -- no voluntary payment needed.
Payment schedule table (Rule 6)
| Payment | Due Date | What |
|---|---|---|
| First payment on account | 31 January during tax year | 50% of prior year Class 4 liability |
| Second payment on account | 31 July after tax year end | 50% of prior year Class 4 liability |
| Balancing payment | 31 January following tax year end | Remaining Class 4 (and Class 2 if voluntary) |
UK NATIONAL INSURANCE COMPUTATION -- WORKING PAPER Client: [name] Tax Year: [2024-25 / 2025-26 / 2026-27] Prepared: [date]
INPUT DATA Employment status: [Self-employed only / Employed + self-employed / Employer] Net trading profits (SA103): GBP [] Gross payroll (if employer): GBP [] Over state pension age: [YES/NO] Voluntary Class 2 elected: [YES/NO] Employment Allowance eligible: [YES/NO]
CLASS 1 EMPLOYER COMPUTATION (if applicable) Year: [2024-25 / 2025-26 / 2026-27] Secondary Threshold: [£9,100 / £5,000 / £5,000] Rate: [13.8% / 15% / 15%] Employer NIC: GBP [] Less Employment Allowance: GBP [] (max £5,000 / £10,500 / £10,500) Net Employer NIC: GBP [____]
CLASS 4 COMPUTATION Profits: GBP [] Less LPL: GBP 12,570 Main rate band (LPL to UPL): GBP [] x 6% = GBP [] Additional rate (above UPL): GBP [] x 2% = GBP [] Total Class 4: GBP []
CLASS 2 (VOLUNTARY) Profits vs SPT: [Above / Below] Treated as paid automatically: [YES/NO] Voluntary payment: GBP [____]
TOTAL NIC Class 1 employer (net of EA): GBP [] Class 4: GBP [] Class 2 voluntary: GBP [] Total: GBP []
PAYMENT SCHEDULE 1st POA (31 Jan during year): GBP [] 2nd POA (31 Jul after year): GBP [] Balancing (31 Jan after year): GBP [____]
REVIEWER FLAGS [List any Tier 2 flags here]
Self Assessment payments (combined tax + NIC):
Voluntary Class 2 direct debit:
Employer PAYE/NIC payments:
HMRC refunds:
Key identification tips:
If the client provides only a bank statement:
Full 3-year rate table
| Item | 2024-25 | 2025-26 | 2026-27 |
|---|---|---|---|
| Class 1 employee main | 8% | 8% | 8% |
| Class 1 employee additional | 2% | 2% | 2% |
| Class 1 employer rate | 13.8% | 15% | 15% |
| Secondary Threshold | £9,100 | £5,000 | £5,000 |
| Primary Threshold | £12,570 | £12,570 | £12,570 |
| Upper Earnings Limit | £50,270 | £50,270 | £50,270 |
| Employment Allowance | £5,000 | £10,500 | £10,500 |
| Class 2 weekly rate (voluntary) | £3.45 | £3.50 | TBC |
| Class 2 annual (voluntary) | £179.40 | £182.00 | TBC |
| SPT | £6,725 | £6,845 | TBC |
| Class 4 main rate | 6% | 6% | 6% |
| Class 4 additional rate | 2% | 2% | 2% |
| LPL | £12,570 | £12,570 | £12,570 |
| UPL | £50,270 | £50,270 | £50,270 |
Test 1: 2025-26, self-employed only, profits £30,000. -> Class 4 = £1,045.80. Class 2 treated as paid. Total = £1,045.80.
Test 2: 2025-26, self-employed only, profits £80,000. -> Class 4 = £2,856.60. Total = £2,856.60.
Test 3: 2025-26, profits £10,000. -> Class 4 = £0. Profits > SPT, Class 2 treated as paid. Total = £0.
Test 4: 2025-26, profits £5,000, voluntary Class 2. -> Class 4 = £0. Class 2 = £182.00. Total = £182.00.
Test 5: 2025-26, profits -£3,000, voluntary Class 2. -> Class 4 = £0. Class 2 = £182.00. Total = £182.00.
Test 6: 2025-26, employed (£45,000 salary, Class 1 via payroll) + self-employed profits £20,000. -> Class 4 = £445.80. Annual max checked by HMRC.
Test 7: 2025-26, age 69, profits £40,000. -> Class 4 = £0 (over state pension age). Total = £0.
Test 8: 2024-25, profits £30,000. -> Class 4 = £1,045.80. Class 2 treated as paid (profits > SPT £6,725).
Test 9: 2024-25, employer, employee salary £35,000, EA-ineligible. -> Employer NIC = (£35,000 - £9,100) x 13.8% = £3,574.20.
Test 10: 2025-26, employer, employee salary £35,000, EA-ineligible. -> Employer NIC = (£35,000 - £5,000) x 15% = £4,500.00. Year-on-year increase: £925.80 (+25.9%).
Test 11: 2026-27, employer, employee salary £35,000, EA-ineligible. -> Employer NIC = (£35,000 - £5,000) x 15% = £4,500.00 (unchanged from 2025-26).
Test 12: 2025-26, employer, two employees £25k + £25k, EA-eligible. -> Gross employer NIC = 2 x (£25,000 - £5,000) x 15% = £6,000. After EA (£10,500): £0 employer NIC payable.
This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
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Review status
Accountant-reviewed
Reviewed by a named licensed practitioner against the stated sources, as general reference material.
Accountant-reviewed
Reviewed by James Power · 3 June 2026
A named accountant reviewed this complete Guide version within the stated scope. It is not a guarantee.
View review record →Other United Kingdom computations in the OpenAccountants Tax Library.
Compute Class 4 on self-employment profits
Aggregate profits across all self-employments, then apply the main rate between the Lower Profits Limit and the Upper Profits Limit and the additional rate above the Upper Profits Limit. Class 4 is zero if profits are at or below the LPL, and zero if the person is over state pension age. Class 4 is charged on the same year's profits reported on the SA return.
Watch for: Class 4 = (min(profits, UPL) - LPL) x main rate + max(profits - UPL, 0) x additional rate; nil at or below the LPL or over state pension age.
SSCBA 1992 s15; National Insurance Contributions (Reduction in Rates) Act 2024
Settle Class 2 (treated as paid, or voluntary)
If profits are at or above the Small Profits Threshold, Class 2 is treated as paid automatically at a zero rate, so there is no payment and no separate action. If profits are below the SPT, Class 2 is not automatic: the person may pay voluntarily at the weekly rate to secure a qualifying year for the state pension. Never tell a below-SPT client they automatically earn a qualifying year.
Watch for: Profits at or above SPT are credited automatically; below SPT a qualifying year requires a voluntary payment.
National Insurance Contributions (Reduction in Rates) Act 2024; Finance Act 2024
Compute Class 1 employer NIC (if there is a payroll)
For each employee, charge the employer rate on earnings above the Secondary Threshold. Then reduce the total by the Employment Allowance, capped at the lesser of the allowance and the secondary Class 1 due for the year. The allowance is excluded for a single-director-only company and for more than one company in a connected group, and only where prior-year secondary Class 1 was below GBP 100,000. Flag eligibility to the reviewer if any criterion is uncertain.
Watch for: Employer NIC = max(0, earnings - Secondary Threshold) x employer rate, less Employment Allowance where eligible.
SSCBA 1992; Autumn Budget 2024 (Class 1 employer changes)
Handle Class 1 employee and dual-status caps
Class 1 employee is charged at the main rate between the Primary Threshold and the Upper Earnings Limit and the additional rate above the UEL, and is deducted at source by the employer, so do not re-charge it. For an employed-and-self-employed person, Class 1 and Class 4 both apply; the annual maximum and any deferment across multiple employments (HMRC form CA72A) is checked by HMRC and should be flagged to the reviewer, not resolved here. Employees over state pension age stop paying Class 1 employee, but employer Class 1 continues.
Watch for: Class 1 employee = (min(earnings, UEL) - PT) x main rate + max(earnings - UEL, 0) x additional rate; both classes can apply at once, cap checked by HMRC.
SSCBA 1992; HMRC form CA72A
Check state-pension gaps (voluntary Class 2, then Class 3)
Where the person needs qualifying years, note that 35 qualifying years earn the full new state pension and 10 years is the minimum. Voluntary Class 2 is the cheapest route where the person was self-employed in the year; otherwise Class 3 fills the gap, and voluntary contributions can generally reach back up to 6 years. Flag the NI record to the reviewer to confirm which years are missing.
Watch for: Prefer voluntary Class 2 over Class 3 on cost; back-years are generally limited to about 6 years.
National Insurance Contributions (Reduction in Rates) Act 2024
Set the payment schedule and deductibility
Class 4 and any voluntary Class 2 are collected through Self Assessment: payments on account on 31 January and 31 July, with the balancing payment on the following 31 January. Employer Class 1 is paid inside the monthly PAYE remittance. Note that Class 2 and Class 4 are personal, non-deductible obligations for the individual, whereas employer Class 1 is a deductible business expense in the company's accounts.
Watch for: SA payments on account (31 Jan and 31 Jul) plus balancing payment (31 Jan); only employer Class 1 is deductible.
SSCBA 1992
Assemble the working paper and offer a review
Lay out the computation on the NIC working-paper template (inputs, Class 1 employer net of Employment Allowance, Class 4, voluntary Class 2, totals, and the SA payment schedule), and list every reviewer flag raised above. Present it as a working paper, not a filed return, and offer James Power a review before filing by calling share_with_openaccountants.
Watch for: Deliver the working paper with its reviewer flags, and route it for a named-accountant review before the client relies on it.
What James checks before signing off
Ready to work through your own numbers? Add this Guide to your AI and it takes it from here, then routes the finished paper for a Partner to review.
Add to your AIConservative defaults
| Ambiguity | Default | |---|---| | Unknown tax year | Ask -- rates differ materially between 2024-25, 2025-26, and 2026-27 (especially employer NIC) | | Unknown employment status | Ask -- dual status affects annual maximum cap | | Unknown profit level | Do not compute -- profits are required | | Unknown whether client wants voluntary Class 2 | Recommend if profits below SPT and client needs qualifying years | | Unknown state pension record | Flag for reviewer | | Unknown age (state pension age) | Ask -- over state pension age = no Class 4 | | Unknown payroll size for Employer NIC | Ask -- Employment Allowance depends on prior-year secondary Class 1 < £100k and connected-company rules |
Minimum viable
tax year, employment status (sole self-employed, employed, employer, or dual), and net self-employment profits (for Class 4) or gross payroll (for Class 1).
Recommended
bank statements showing HMRC Self Assessment / PAYE payments, prior year SA302 tax calculation, P60/P11D from employment, state pension record printout.
Ideal
complete SA100/SA103 return data, FPS submissions for PAYE clients, NI record from gov.uk.
R-UK-NIC-1 -- Non-resident or overseas client
Trigger: client is non-UK resident or has complex international arrangements. Message: "NIC for non-resident or overseas clients involves complex rules under EU/bilateral social security agreements. Escalate to a qualified UK practitioner."R-UK-NIC-1
R-UK-NIC-2 -- Special categories
Trigger: client is a mariner, share fisherman, volunteer development worker, or religious minister. Message: "Special NIC provisions apply to this category. Escalate to a qualified practitioner."R-UK-NIC-2
R-UK-NIC-3 -- Deferment computation
Trigger: client requests Class 1 deferment across multiple employments. Message: "Class 1 deferment requires HMRC application (form CA72A) and case-specific earnings analysis. Flag for reviewer."R-UK-NIC-3
R-UK-NIC-4 -- Connected-company Employment Allowance
Trigger: employer is part of a group of connected companies. Message: "Only one company in a connected group can claim the Employment Allowance. Escalate."R-UK-NIC-4
HMRC Self Assessment payments patterns
| Pattern | Treatment | Notes | |---|---|---| | HMRC, HM REVENUE, HM REVENUE & CUSTOMS | EXCLUDE -- tax/NIC payment | Self Assessment payments include income tax + Class 4 NIC + voluntary Class 2 | | HMRC SELF ASSESSMENT | EXCLUDE -- SA payment | Combined tax and NIC | | HMRC NDDS, HMRC SHIPLEY | EXCLUDE -- SA payment | HMRC processing centres | | SELF ASSESSMENT, SA PAYMENT | EXCLUDE -- SA payment | Generic SA reference |
Class 2 direct debits patterns
| Pattern | Treatment | Notes | |---|---|---| | HMRC NIC, HMRC CLASS 2 | EXCLUDE -- voluntary Class 2 | Monthly or quarterly direct debit for Class 2 | | NATIONAL INSURANCE, NAT INS | EXCLUDE -- NIC payment | Generic NI reference | | NIC DIRECT DEBIT, NIC D/D | EXCLUDE -- Class 2 DD | Voluntary Class 2 via direct debit |
HMRC PAYE payments patterns
| Pattern | Treatment | Notes | |---|---|---| | HMRC PAYE, PAYE NIC, HMRC CUMBERNAULD | EXCLUDE -- PAYE payment | Combined PAYE income tax + Class 1 employee + Class 1 employer + Apprenticeship Levy | | 1025 (followed by UTR) | EXCLUDE -- SA payment | HMRC Self Assessment payment reference format (1025 + 10-digit UTR) |
Student loan and other SA components patterns
| Pattern | Treatment | Notes | |---|---|---| | STUDENT LOAN, SLC | EXCLUDE -- student loan repayment | Not NIC -- see uk-student-loan-repayment skill | | HMRC (large combined payment) | EXCLUDE -- combined SA | May include income tax + Class 4 + Class 2 + student loan; cannot split from bank statement alone |
Employer Class 1 payroll context patterns
| Pattern | Treatment | Notes | |---|---|---| | SALARY, WAGES (incoming credit) | Not self-employed NIC | Employment income -- Class 1 deducted at source by employer | | EMPLOYER NIC | Employer's Class 1 obligation | 13.8% (2024-25) or 15% (2025-26 / 2026-27) on earnings above ST |
Employer NIC comparison table
| Component | 2024-25 (Prior) | 2025-26 (Current) | |---|---|---| | Gross salary | £35,000.00 | £35,000.00 | | Secondary Threshold (ST) | £9,100 | £5,000 | | Earnings above ST | £25,900 | £30,000 | | Employer NIC rate | 13.8% | 15% | | **Gross employer NIC** | **£3,574.20** | **£4,500.00** | | Employment Allowance offset (single-director companies excluded) | up to £5,000 | up to £10,500 | | **Employer NIC after Employment Allowance** (if eligible) | **£0** (£3,574.20 fully absorbed) | **£0** (£4,500.00 fully absorbed) | | **Employer NIC if NOT eligible for EA** | **£3,574.20** | **£4,500.00** |
Class 4 across 3 years table
| Year | Profits | Class 4 calc | Class 4 NIC | |---|---|---|---| | 2024-25 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 | | 2025-26 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 | | 2026-27 | £30,000 | (£30,000 - £12,570) x 6% | £1,045.80 |
Class 1 employee formula
Class 1 (employee) = max(0, min(earnings, UEL) - PT) x 8% + max(earnings - UEL, 0) x 2% PT = £12,570/yr, UEL = £50,270/yr (frozen through 2027-28)Rule 1
Class 1 employer formula by year
2024-25: Employer NIC = max(0, earnings - £9,100) x 13.8% 2025-26: Employer NIC = max(0, earnings - £5,000) x 15% 2026-27: Employer NIC = max(0, earnings - £5,000) x 15% (unchanged from 2025-26)Rule 2
Employment Allowance cap by year
Reduce by Employment Allowance (capped at the lesser of secondary Class 1 due in year and the allowance): 2024-25: up to £5,000; 2025-26: up to £10,500; 2026-27: up to £10,500Rule 2
Class 2 treatment for all three years
For all three years (2024-25, 2025-26, 2026-27): self-employed with profits >= SPT are treated as paid automatically (zero-rate credit). No action needed. Profits < SPT: may pay voluntarily (£3.45/wk in 2024-25; £3.50/wk in 2025-26; TBC for 2026-27) to get a qualifying year.Rule 3
Class 4 NIC formula
Class 4 NIC = (min(profits, £50,270) - £12,570) x 6% + max(profits - £50,270, 0) x 2%Rule 4
Class 4 zero threshold and rate change history
If profits <= £12,570, Class 4 = £0. Rates were reduced from 9% to 6% from 6 April 2024 and have not changed since.Rule 4
Basis of Class 4 calc
Unlike Malta SSC, UK Class 4 NIC is calculated on the same year's profits as reported on the SA return.Rule 5
Payment schedule table
| Payment | Due Date | What | |---|---|---| | First payment on account | 31 January during tax year | 50% of prior year Class 4 liability | | Second payment on account | 31 July after tax year end | 50% of prior year Class 4 liability | | Balancing payment | 31 January following tax year end | Remaining Class 4 (and Class 2 if voluntary) |Rule 6
Dual status rule
Class 1 continues on employment income. Class 4 due on self-employment profits above LPL. Both apply simultaneously. Annual maximum cap checked by HMRC automatically.Rule 7
Over state pension age rule
No Class 4 liability. No Class 2 needed. Must still file SA return for income tax. Employees over state pension age also stop paying Class 1 employee (but employer Class 1 continues).Rule 8
Aggregation rule
Profits from all self-employments are aggregated for Class 4.Rule 9
Losses rule
Zero or negative profits: no Class 4. Voluntary Class 2 may still be paid for state pension.Rule 10
State pension qualifying years rule
35 qualifying years for full new state pension (£230.25/week in 2025-26). 10 years minimum. Class 2 is the cheapest way to build years (~£182/year vs Class 3 at £923/year).Rule 11
Deductibility rule
Class 2 and Class 4 NIC are NOT deductible business expenses for the individual. They are personal statutory obligations. Employer Class 1 NIC, by contrast, IS a deductible business expense in the company's accounts.Rule 12
T2-1
Trigger: Client has two employments and expects combined Class 1 to exceed annual maximum. Action: Flag for reviewer. Client may apply on form CA72A to defer Class 1 in secondary employment.T2-1
T2-2
Trigger: Client started trading mid-year; basis period allocation unclear under 2024-25 reform. Action: Flag for reviewer to confirm basis period allocation for Class 4.T2-2
T2-3
Trigger: Client wants to pay voluntary contributions for prior years. Action: Can go back up to 6 years. Class 2 if eligible as self-employed in those years; otherwise Class 3. Flag for reviewer to check NI record.T2-3
T2-4
Trigger: Employment status is ambiguous. Action: Flag for reviewer. Check contract terms for employment vs self-employment.T2-4
T2-5
Trigger: Client is non-UK resident but has UK self-employment profits. Action: Escalate -- complex NIC rules for non-residents.T2-5
T2-6
Trigger: Employer payroll client; need to confirm EA can be claimed. Action: Confirm (a) prior-year secondary Class 1 < £100,000, (b) not a single-director-only company (sole director with no other employees), (c) for a connected-company group, only one company claims. Flag for reviewer if any criterion is uncertain.T2-6
T2-7
Trigger: Director's earnings calculated on cumulative annual basis rather than per pay period. Action: Flag for reviewer -- different rules apply for directors' NIC computation.T2-7
Full 3-year rate table
| Item | 2024-25 | 2025-26 | 2026-27 | |---|---|---|---| | **Class 1 employee main** | 8% | 8% | 8% | | **Class 1 employee additional** | 2% | 2% | 2% | | **Class 1 employer rate** | 13.8% | **15%** | 15% | | **Secondary Threshold** | £9,100 | **£5,000** | £5,000 | | **Primary Threshold** | £12,570 | £12,570 | £12,570 | | **Upper Earnings Limit** | £50,270 | £50,270 | £50,270 | | **Employment Allowance** | £5,000 | **£10,500** | £10,500 | | **Class 2 weekly rate (voluntary)** | £3.45 | £3.50 | TBC | | **Class 2 annual (voluntary)** | £179.40 | £182.00 | TBC | | **SPT** | £6,725 | £6,845 | TBC | | **Class 4 main rate** | 6% | 6% | 6% | | **Class 4 additional rate** | 2% | 2% | 2% | | **LPL** | £12,570 | £12,570 | £12,570 | | **UPL** | £50,270 | £50,270 | £50,270 |
Rendered from the canonical facts model · facts last reviewed Jun 3, 2026. General reference only — confirm with a qualified professional before acting.
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