National Insurance Contributions
Both the employed, and the self-employed who pay Class 4 contributions, will be able to earn up to £9,500 in 2020/21 before NICs announced the Budget of 2020.
If you employer a veteran, then a new National insurance “holiday” is being introduced for the first year of civilian employment.
National Insurance rates for 2020/21 are remaining the same.
Employed 2019/20 Employed 2020/21
How much you earn Class 1 rate How much you earn Class 1 rate
Less than £8,632 0% Less than £9,500 0%
£8,632 – £50,000 12% £9,500 – £50,000 12%
More than £50,000 2% More than £50,000 2%
Self Employed 2019/20 Self Employed 2020/21
How much you earn Class 2 & 4 rates How much you earn Class 2 & 4 rates
Less than £6,365 0% Less than £6,475 0%
£6,365 – £8,632 £3 per wk (Class 2) £6,475 – £9,500 £3.05 per wk
£8,632 – £50,000 9% + £3 per wk £9,500 – £50,000 9% + £3.05 per wk
More than £50,000 2% + £3 per wk More than £50,000 2% + £3.05 per wk
Employment Allowance Scheme
The Employment Allowance scheme (introduced in 2014) was to allow certain businesses who employ staff to reduce their National Insurance Class 1 bill by £3,000 and claimed via payroll.
From 6 April 2020 the Employers Allowance will increase to £4,000 but will only be available to smaller businesses with an employer’s NI bill of £100,000 or less in the previous tax year.
If your business is part of a group of companies or has related companies under the same control, only one company in the group can claim the allowance.
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