Class 1 National Insurance

National Insurance (NI) was established to provide funds for the Social Security system. Workers and their employers are both responsible for contributing. If you pay into National Insurance, you can get benefits like a pension from the government. Some National Insurance plans offer more generous rights than others. In particular, Class 1 National Insurance, which is paid by workers, gives contributors access to benefits that are not based on their ability to pay.

The task of withholding income tax and Class 1 National Insurance from employees’ paychecks falls on the shoulders of the employer. The monthly tax withholding amounts are paid to the Treasury by the employer. An employer’s National Insurance consists of two parts: the employee’s National Insurance Contributions, which are taken out of their gross pay, and the employer’s National Insurance Contributions, which are on top of the worker’s gross pay. National Insurance is mandatory only for working individuals between the ages of 16 and the official retirement age. When an employee hits the legal retirement age, National Insurance contributions from the employer do not cease, and it continues.

If you need help with employment tax compliance, please call our accountants for advice.