National Insurance Contributions
Thresholds and rates (Table D)
For 2019/20, the National Insurance Contributions (NIC) thresholds for employers and employees were the same at £166 per week (£8,632 per year). The employee threshold is increased for 2020/21 to £9,500, which represents a reduction in contributions of £104 for most employees; it is now significantly higher than the threshold for employer contributions (£169pw in 2020/21). The upper limits and rates for employee contributions remain unchanged (12% on earnings up to £962pw/£50,000pa, 2% above that). The limits for Class 4 self-employed NIC are likewise £9,500 and £50,000 for 2020/21.
Employment Allowance (EA)
EA is a relief from Class 1 employer’s NI contributions for employers who have two employees who are both paid above the threshold at which those contributions become payable, and whose total liability for employer’s NIC did not exceed £100,000 in the previous year. For tax year 2020/21, EA is increased from £3,000 to £4,000.