Deducting and paying National Insurance

If you employ people to work for your business you may need to deduct National Insurance from their pay.

Find out when you need to deduct National Insurance from your employees, and how you pay it to HMRC with our quick overview.

When you need to deduct National Insurance

If any of your employees earn more than £149 a week you need to deduct Class 1 National Insurance contributions (NICs) from their pay.

You also need to pay a direct contribution on your employee’s earnings over £148 a week. How much depends on:

  • The amount your employee earns.
  • Your employee’s National Insurance category.

If you provide benefits to your employees, such as travel or entertainment expenses or childcare, you may need to pay Class 1A or Class B National Insurance Contributions on them too.

You have to keep National Insurance records for all employees earning more than £109 a week.

If you have people working for your business who are not on your payroll, for example, self-employed or volunteer workers, they are responsible for their own contributions.

How to calculate National Insurance Contributions

To calculate your employees’ National Insurance contributions (NICs) you’ll need their National Insurance category, and will use your Pay As You Earn (PAYE) payroll system.

If your payroll is done manually, you can calculate the amounts you need to enter using the HMRC National Insurance calculator. (If you’re calculating National Insurance Contributions for company directors, you need to use a different calculator.)

How much you need to deduct and pay

There are two types of Class 1 National Insurance Contributions – primary contributions (the amount you deduct from your employees’ pay) and secondary contributions (the amount you pay towards their contributions). The amount of contributions for both depend on your employee’s National Insurance category and their earnings.

How to pay National Insurance Contributions

You can pay Class 1 NICs by direct debit (you set this up when you register as an employer with HMRC) as part of your monthly Pay As You Earn (PAYE) payments.