Employers in the UK use an employee’s National Insurance category letter to help work out how much NI you both need to contribute.
In this article, we will tell you more about what each NI category letter means to help you answer the all-important question—what National Insurance category am I in?
UK employers deduct National Insurance (NI) contributions from their employee’s wages, along with income tax, on top of the contributions they pay. These payments go towards your state pension and other benefits, such as employment support allowance and maternity pay.
If you make over £242 a week and are under the State Pension Age, your Class 1 National Insurance Contributions are automatically deducted from your pay.
You may be interested in: Will there be a State Pension when I retire?
How much is deducted depends on your NI category letter and the band in which your earnings fall.
National Insurance category letters are used when employers run payroll. Your employer will work out how much should be contributed based on these category letters.
Your category letter is shown on your payslip.
Most workers have category A, meaning that normal Employee and Employer Class 1 National Insurance Contributions are due.
These are the National Insurance letter categories and their meaning.
|Category Letter||Employee Group|
|National Insurance Category A||All employees (with the exception of ones in groups B, C, H, J, M, V & Z)|
|National Insurance Category B||NI category B is used for married women and widows entitled to pay a reduced National Insurance rate.|
|National Insurance Category C||This category letter is used for all employees over the State Pension age in the UK|
|National Insurance Category H||NI code for apprentices under the age of 25|
|National Insurance Category J||Category letter J is used for employees who are already paying NI from another job and can defer National Insurance|
|National Insurance Category M||NI code for under 21-year-olds|
|National Insurance Category V||NI code for employees who are still working in their first job since leaving the military|
|National Insurance Category Z||Category letter for employees under 21 years old who are paying NI from another job and can defer National Insurance|
There are other letters for employees who work in freeports where different economic regulations are implemented.
Here are the category letters and corresponding groups of employees.
|Category Letter||Employee Group|
|National Insurance Category F||All employees who work in freeports (other than those in groups I, L, and S)|
|National Insurance Category I||Married women and widows employed in freeports who are eligible for lower National Insurance payments|
|National Insurance Category L||Employees who work in freeports and can defer National Insurance because they’re already paying it from another job|
|National Insurance Category S||Employees that work in freeports and are over the State Pension age|
Category letter X is used for workers who do not pay NI, for instance, under 16-year-olds.
As previously mentioned, your NI contributions are made up of payments deducted from your wages (employee contribution) and payments made by your employer (employer’s contributions).
This is how much employers deduct from your wages in 2022/23 based on your NI category letter.
|Category Letter||£123 to £242 (£533 to £1,048 per month)||£242.01 to £967 (£1,048.01 to £4,189 per month)||Over £967 a week is (£4,189 per month)|
*You stop paying NI contributions when you reach the State Pension Age.
Here’s an example of how this works:
Those in category A that earn £1,000 in a week and
This comes to a total of £97.13 in NI payments a week.
If you need more help calculating your employee National Insurance contributions, you can use government calculators and tables.
This table shows how much companies contribute to employers’ National Insurance for the 2022/23 tax year.
|Category Letter||£123 to £175 (£533 to £758 per month)||£175.01 to £967 (£2,083.01 to £4,189 per month)||Over £967 a week is (£4,189 per month)|
NI category letters are used by employers to calculate how much both of you need to contribute, so it is crucial to know which category you are in and how much is deducted from your pay each month. The NI category you are in will also determine how much your employer contributes.
It’s the NI code for employees under 21 whose employers pay a reduced employer Class 1 secondary NI contribution. The moment the worker turns 21, though, they are assigned under category A (or other applicable category letters).
It’s a category for employees over the State Pension age. For employees who retire, employers need to update their category letter to C in their payroll software, which means they will no longer deduct NI contributions from their salaries. Employer’s contributions are still paid, though.
Your National Insurance Number is a randomly selected combination of 2 letters, 6 numbers and a final letter (always A, B, C or D).
Contrary to popular belief, the final letter of a NINO has nothing to do with your NI category letter. In fact, a NINO does not contain any personal details.
Before April 2016, certain employees could be contracted-out of their Additional state pension (aka State Earnings-Related Pension Scheme), resulting in them receiving a lower State Pension. Those people would see the letter D, E or N on their NI line.
After April 1 2016, no one can be contracted-out.
Your National Insurance category letter is shown on your monthly payslip.
Unless you are a married woman or widow paying a reduced NI rate, under 21 years of age, an apprentice under 25, an army veteran still in their first job, over the State Pension Age or currently have more than one job, you are in category A.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.