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Hike in National Insurance

The 2008 Pre-Budget Report announced increases in the main rate of Class 1 and 4 National Insurance (“NI”) of 0.5% to 11.5% and 8.5% respectively, with the employer’s rate also increasing by 0.5% to 13.3%. These changes were due to be effective from 6 April 2011.

The 2009 Pre-Budget Report has announced a further 0.5% increase in the rates so they will actually increase by 1% in 2011. With the effect that from 6 April 2011 the main NI rates will be:

  • Class 1 Employees – 12%
  • Class 4 self-employed – 9%
  • Class 1 Employers – 13.8%

Employees and the self-employed earning above the upper earning limit will pay 2% on the excess, which is also a 1% increase on the current rate.

The 13.8% employer rate will also be used when calculating an employers liability to both Class 1A and Class 1B NI.

The NI primary and lower profit thresholds will be increased by £570 for 2011/12 over the amounts announced in 2008 as a means of compensation for some on lower incomes.

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