Budget 2011 National Insurance
Published / Last Updated on 23/03/2011
Budget 2011 National Insurance.
Exceptions to the rule are the Secondary Threshold, which will be indexed against the RPI for the remainder of this Parliament and Upper Earnings Limit and Class 4 Upper Profits Limit which will continue to be aligned to the higher rate tax threshold.
The Government announced it will issue a consultation paper later this year on the integration of the operation of income tax and NICs. The aim of the integration is to remove distortions created by the tax system, reduce burdens on business and improve fairness for individuals.
NICs will not be extended to those over State Pension age or to other forms of income, such as pensions, savings and dividends; and the contributory principle will be maintained.
The rates for 2011/12 are as follows:
- The Employee’s Primary Class 1 National Insurance rate is 12% on earnings between the Primary Threshold (£139 per week - £7,225 pa) and Upper Earnings Limit (£817 per week - £42,475 pa).
- Employees, in addition, pay 2% Primary Class 1 National Insurance on all earnings above the Upper Earnings Limit (£42,475 per annum).
- The Employer’s Secondary Class 1 contribution rate on earnings above the Secondary Threshold (£136 per week - £7,072 pa) is 13.8%. This rate applies also to Class 1A and Class 1B contributions.
- The self-employed Class 4 rate on profits between the Lower (£7,225 pa) andUpper Profits Limit (£42,475 pa) is 9%.
- The self-employed Class 2 flat rate contribution is £2.50 per week. The self-employed, in addition, pay Class 4 contributions at a rate of 2% on allprofits above the Upper Profits Limit (£42,475).
- The Class 3 voluntary contribution rate is £12.60 per week.
- The Married Women’s Reduced Rate is 5.85%.
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