Budget summary, autumn 2017

National Insurance Contributions

National Insurance Contributions

Thresholds and rates (Table D)

From 6 April 2018, the National Insurance Contributions (NIC) thresholds for employers and employees rise from £157 to £162 per week (£8,424 per year). The Upper Earnings Limit will increase to £892 per week (£46,384 per year, or £46,350 where a single annual calculation is carried out) in line with the threshold for 40% Income Tax.

In the March Budget, it was announced that there would be increases in the rates of Class 4 NIC for the self employed in April 2018 and April 2019. Following protests that this was contrary to a manifesto pledge at the 2015 General Election, the Government dropped the proposal. Although the pledge was not repeated in this year's manifesto, the Chancellor confirmed that the increases will not now be implemented.

It was also previously announced that Class 2 NIC would be abolished in April 2018, and entitlement to State Pension would be built up by paying Class 4 NIC. Those who earn low profits do not pay Class 4, so they would have to pay Class 3 NIC to qualify for State Pension.

The Government has noted concerns that this would increase costs for low earners, because Class 3 contributions are substantially higher than Class 2. They will therefore delay the abolition of Class 2 NIC until April 2019, and will consult on possible alternative arrangements in the meantime.

Budget summary 2017PDF document