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HMRC internal manual

National Insurance Manual

Class 1 structural overview: abolition of secondary NICs for those employees under the age of 21: assessment

The examples below use the rates that apply for the 2016 to 2017 tax year.

Example 1

A monthly paid employee is under the age of 21 at the time earnings of £1,600 are paid. The earnings fall below the Upper Secondary Threshold (UST).

Primary £1,600 - £672 = £928 x 12% = £111.36
     
Secondary £1,600 - £676 = £924 x 0% = £0
Total NICs due   = £111.36

Example 2

A monthly paid employee is under the age of 21 at the time earnings of £4,000 are paid. The earnings are above the monthly UST.

Primary £4,000 - £3,583 = £417 x 2%
plus£3,583 - £672 = £2,911 x 12% =£8.34
 =£349.32    
     
  Secondary £4,000 - £3,583 = £ 417 x 13.8%
plus£3,583 - £676 = £2,907 x 0% =£57.55
 = £0      
  Total NICs due   = £415.21

Example 3

A monthly paid employee is under the age of 21 at the time earnings of £2,300 are paid, and is a member of his employer’s contracted out salary related pension scheme. The earnings are below UST.

Primary £2,300 - £672 = £1,628 x 12%
minus£2,300 - £486 = £1,814 x 1.4% = £195.36
minus= £25.40    
     
  Secondary £2,300 - £676 = £1,624 x 0%
minus£2,300 - £486 = £1,814 x 3.4% = £0
minus= £61.68      
  Total NICs due   = £108.28