9 March 1999 Budget

National insurance contributions 2000/01

Employees

From 6 April 2000, the threshold of earnings above which people will pay NICs will increase to £76 per week. A zero rate of NICs will apply on earnings between the previous lower limit and the new threshold, to protect benefit entitlement. The threshold of earnings above which employees will pay no NICs (the upper earnings timit) will increase to £535 per week.

Employers

From 6 April 2000, employer NICs will be extended to those benefits-in-kind which are already subject to income tax, eg, private medical insurance and cheap loans.

Self-employed

From 6 April 2000, the class 2 NICs charge will be reduced from £6.55 to £2 per week. It is assumed that the starting point for class 2 NICs will be indexed to £73.50 per week from April 2000. At the same time, the starting point for class 4 NICs will be aligned with the income tax personal allowance at £85 per week, and the contribution rate increased to 7%. The upper profits limit rises with the upper earnings limit, described above.

National Insurance contribution rates

Class 1 (Employees)

Not contracted out of SERPS

1999/2000  
Employee Employer
  • No NICS on the first £66 per week
  • 10% NICS on £66.01 - £500 per week
  • No NICS on the first £83 per week
  • 12.2% NICs over £83 per week
1998/1999  
Employee Employer
  • No NICs where earnings are under £64 per week
  • 2% of £64 per week plus 10% of excess on £64-£485 per week
  • £43.38 per week on earnings over £485 per week
Earnings per week Rate
Below £64 Nil
£64-£109.99 3%
£110-£154.99 5%
£155-£209.99 7%
£210 & over 10%

Certain married women/widows: Reduced rate 3.85% employee contribution £66.01-£500 per week (£64-£485 per week 1998/1999)

Earnings Limits   1999/2000       1998/1999    
Lower Weekly Monthly Annual   Weekly Monthly Annual  
  £ £ £   £ £ £  
Employee 66 286 3,432   64 278 3,328  
Employer 83 361 4,335   64 278 3,328  
Upper 500 2,167 26,000   485 2,102 25,220  
Contracted out of SERPS (Rebate) 1999/2000 1998/1999
Reduction on band earnings per week £66.01-£500 £64-£485
Employer rate reduction    
Salary-related scheme 3.0% 3.0%
Money-purchase scheme 0.6% 1.5%
Employee rate reduction 1.6% 1.6%

Class 1A: Car benefit and car fuel paid by employer at 12.2% (10% 1998/1999)

Class 2 (Self-employed) 1999/2000 1998/1999
Flat rate £6.55 per week £6.35 per week
If earnings over £3,770 pa £3,590 pa
Class 4 (self-employed)    
Flat rate 6% 6%
On profits £7,350-£26,000 pa £7,310-£25,220 pa
Class 3 (Voluntary)    
Flat rate £6.45 per week £6.25 per week

The summary has beeen prepared very rapidly and may contain errors for which we cannot be held responsible. The proposals are in any event subject to amendment before the Finance Act is passed.