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New National Insurance Contributions Bill confirms new NICs rates from April
Wednesday, October 20th, 2010
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The Coalition government announced early after coming to power that the 2011/12 increases in Class 1 NICs rates announced by the Labour government in the 2009 Pre-Budget Report (PBR) would be applied unchanged. The promised National Insurance Contributions Bill, introduced in Parliament on 14 October, sets out the new rates as follows:
- the main primary (employee) percentage increases from 11% to 12%
- the additional primary percentage increases from 1% to 2%
- the secondary (employer) percentage increases from 12.8% to 13.8%.
These increases are given effect by amendments to sections 8 and 9 of the Social Security Contributions and Benefits Act 1992. The Bill makes no reference to corresponding increases in the Class 1A and 1B rates to 13.8% (as announced in the 2009 PBR), nor to any increase in the reduced rate for married women (not mentioned at all in the 2009 PBR). No announcements have been made about the level of the contracted-out rebates.
Currently, therefore, the full Class 1 NICs rates structure from April 2011 is expected to be as follows:
| Employer
Contributions 2011/12 |
Not
Contracted-out |
Contracted-out Schemes | |
| Salary Related | Money Purchase | ||
| Table Letters | A, B, C and J | D, E and L | F, G and S |
| Contributions on earnings up to LEL | NIL | NIL | NIL |
| Contributions on earnings between the LEL and ST | 0% | 0%, less 3.7% rebate | 0%, less 1.4% rebate |
| Contributions on earnings between the ST and UAP | 13.8% | 10.1%, i.e. 13.8% less 3.7% rebate | 12.4%, i.e. 13.8% less 1.4% rebate |
| Contributions on earnings between the UAP and UEL | 13.8% | 13.8% | 13.8% |
| Contributions on earnings above UEL | 13.8% | 13.8% | 13.8% |
| Employee
Contributions 2011/12 |
Not
Contracted-out |
Contracted-out Schemes | ||||
| Table Letters | A | B | J | D and F | E and G | L and S |
| Contributions on earnings up to LEL | NIL | NIL | NIL | NIL | NIL | NIL |
| Contributions on earnings between the LEL and PT | 0% | 0% | 0% | 0% less 1.6% rebate | 0% | 0% less 1.6% rebate |
| Contributions on earnings between the PT and UAP | 12% | 4.85% | 2% | 10.4%, i.e. 12% less 1.6% rebate | 4.85% | 2%, i.e. 3.6% less 1.6% rebate |
| Contributions on earnings between the UAP and UEL | 12% | 4.85% | 2% | 12% | 4.85% | 2% |
| Contributions on earnings above UEL | 2% | 2% | 2% | 2% | 2% | 2% |
The Bill also contains the legislation to introduce the Regional Secondary Contributions Holiday for New Employees that was introduced on 6 September 2010. In an earlier newsletter we provided a detailed explanation of the scheme.
Further information:
National Insurance Contributions Bill 2010
Ian Holloway says:
December 23rd, 2010
14:26
Shouldn’t B, E and G percebtage rates be 5.85% and not 4.85%?
Ian Congreave says:
February 17th, 2011
08:34
Yes, there was no reference to any increase in the “reduced-rate” contribution in the Bill and no reference to it in explanatory documents at the time. However, it is 5.85% for 2011/12 and the corrected Table is to be found at http://www.payroll-help.com/2010/12/statutory-payment-rates-2011-2012/
Douglas S Robertson says:
April 22nd, 2011
18:55
Are there any plans that you know of for nic or tax rate changes later on this tax year as someone has suggested to me?
Ian Congreave says:
April 23rd, 2011
08:33
Douglas: Nothing has been suggested or published by the Government about an increase in tax and NICs rates during the 2011/12 tax year. We would expect announcements about the rates for 2012/13 in November or December.