National Insurance Category Letters

Please find the all the information you need it regards to National Insurance Category letters. National insurance contributions are a tax on earnings. Your contributions will be taken off along with your income Tax before your employer pays your wages. Contributions are taken to help build your entitlement to certain state benefits such as state pension and maternity allowance.

All of the below category’s are for class 1 National Insurance contributions. This is for employees earning more than £702.00 a month and are under the state pension age.

National Insurance category letters are used during payroll runs. Employers work out how much needs to be contributed by using these. Contributions are made both from the employer and employee. Your employer will also pay into your National Insurance Contributions but these rates will be slightly different from yours. Your category can be found on your Pay slip.

• NI Category Letter A
• NI Category Letter B
• NI Category Letter C
• NI Category Letter J
• NI Category Letter H
• NI Category Letter M
• NI Category Letter Z
• NI Category Letter X

National Insurance Category Letter A

Most employees will be registered under category ‘A’. All employees apart from those in groups B, C, J, H, M and Z full under this category.

If you are classed under category ‘A’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn over this amount, you will be deducted at 12% on your earnings between the amounts of £702.01 – £3863 a month. Any other earnings above £3863 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
12% is then deducted for the earnings between £162.01 and £892. NI Contribution = £87.60.
2% is deducted on the remaining earnings above £892. NI contribution = £2.16 

The total contribution from this employee per week would be £89.76.

If you are classed under category ‘A’ your employer will have to pay 0% on earnings between £503 – £702 and 13.8% on any earnings above £702.01 (the same as category B, C and J).

Once again to makes things easier to understand, please see below example;

Employee is earning £1000 a week.
Nothing is taken for the first £162. NI contribution = £0
13.8% is then deducted for the earnings above £162.01 NI Contribution = £115.64

The total contribution from this employer per week would be £115.64.

National Insurance Category Letter B

Employees who fall under this category are married women and widows entitled to pay reduced national insurance.

If you are classed under category ‘B’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn over this amount, you will be deducted at 5.85% on your earnings between the amounts of £702.01 – £3863 a month. Any other earnings above £3863 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
5.85% is then deducted for the earnings between £162.01 and £892. NI Contribution = £42.70.
2% is deducted on the remaining earnings above £892. NI contribution = £2.16

The total contribution from this employee per week would be £44.86.

If you are classed under category ‘B’ your employer will have to pay 0% on earnings between £503 – £702 and 13.8% on any earnings above £702.01 (the same as category A, C and J).

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
13.8% is then deducted for the earnings above £162.01 NI Contribution = £115.64

The total contribution from this employer per week would be £115.64.

National Insurance Category Letter C

Category ‘C’ is for employees whom are over the state pension age (retirement age of 65). You do not pay national insurance if you work past state pension age.

If you are classed under category ‘C’ your employer will have to pay 0% on earnings between £503 – £702 and 13.8% on any earnings above £702.01 (the same as category A, B and J).

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
13.8% is then deducted for the earnings above £162.01 NI Contribution = £115.64 

The total contribution from this employer per week would be £115.64.

National Insurance Category Letter J

Employees in this category defer national insurance because they are already paying contributions in another job (Employees whom have more than one job).

If you are classed under category ‘J’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn above £702.01 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
2% is then deducted for remaining earnings above £162.01. NI contribution = £14.60

The total contribution from this employee per week would be £14.60.

If you are classed under category ‘J’ your employer will have to pay 0% on earnings between £503 – £702 and 13.8% on any earnings above £702.01 (the same as category A, B and C).

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
13.8% is then deducted for the earnings above £162.01 NI Contribution = £115.64

The total contribution from this employer per week would be £115.64.

National Insurance Category Letter H

If you are an apprentice under 25 you will full under category H.

If you are classed under category ‘H’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn over this amount, you will be deducted at 12% on your earnings between the amounts of £702.01 – £3863 a month. Any other earnings above £3863 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
12% is then deducted for the earnings between £162.01 and £892. NI Contribution = £87.60.
2% is deducted on the remaining earnings above £892. NI contribution = £2.16

The total contribution from this employee per week would be £89.76.

If you are classed under category ‘H’ your employer will have to pay 0% on earnings between £503 – £3863 and 13.8% on any earnings above £3863.

Employee is earning £1000 a week.

Nothing is taken for the first £892. NI contribution = £0
13.8% is then deducted for the earnings above £892 NI Contribution = £14.90

The total contribution from this employer per week would be £14.90

National Insurance Category Letter M

If you are the under age of 21 year you will be in category M.

If you are classed under category ‘M’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn over this amount, you will be deducted at 12% on your earnings between the amounts of £702.01 – £3863 a month. Any other earnings above £3863 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
12% is then deducted for the earnings between £162.01 and £892. NI Contribution = £87.60.
2% is deducted on the remaining earnings above £892. NI contribution = £2.16

The total contribution from this employee per week would be £89.76.

If you are classed under category ‘M’ your employer will have to pay 0% on earnings between £503 – £3863 per month and 13.8% on any earnings above £3863 per month.

Employee is earning £1000 a week.

Nothing is taken for the first £892. NI contribution = £0
13.8% is then deducted for the earnings above £892 NI Contribution = £14.90

The total contribution from this employer per week would be £14.90

National Insurance Category Letter Z

Category Z is for employees whom are under the age of 21 and defer national insurance because they are already paying contribution in another job (under 21 and have more than one job).

If you are classed under category ‘Z’ employers will deduct from employees 0% from between £503 – £702 a month. If you earn above £702.01 a month will be deducted at 2%.

To makes things easier to understand, please see below example;

Employee is earning £1000 a week.

Nothing is taken for the first £162. NI contribution = £0
2% is then deducted for remaining earnings above £162.01. NI contribution = £14.60

The total contribution from this employee per week would be £14.60.

If you are classed under category ‘Z’ your employer will have to pay 0% on earnings between £503 – £3863 per month and 13.8% on any earnings above £3863 per month.

Employee is earning £1000 a week.

Nothing is taken for the first £892. NI contribution = £0
13.8% is then deducted for the earnings above £892 NI Contribution = £14.90

The total contribution from this employer per week would be £14.90.

National Insurance Category Letter X

Category letter ‘X’ is used for employees who do not have to pay national insurance. For example, if they are under 16 years of age.

Each year the full rates and thresholds change so we would recommend checking for any updates. The above is based on tax year 2018 to 2019.