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National Insurance Contributions
There are currently four categories of contributions: Class 1, Class 2, Class 3 and Class 4.
Class 1: Employees earning above the lower earnings limit pay contributions at a rate dependent on their income and whether they are contracted in or out of S2P (State Second Pension). The contributions are made up to the upper earnings limit, that is, no NI contributions are payable on earnings above this limit. In addition to employees' contributions, employers must pay Class 1 contributions on all the employees' earnings.
Class 2: Self employed people pay flat rate Class 2 contributions provided profits are above a certain level.
Class 3: These are voluntary contributions which can make up for unpaid contributions over the previous six years.
Class 4: Self employed people also pay a percentage of profits between given limits.
Submitted by: admin
Added: Tue Jun 06 2006
