National Insurance Thresholds change at the 6th April every year

Every 6th April new guide lines are issued by HMRC which determine how much gross pay employees can earn without attracting class 1 national insurance deductions or employer secondary contributions.

The amount deductible depends on the gross earnings of the employee, their age, their employment status and the national insurance letter allocated to them by HMRC.

All employees are entitled to a certain amount of free pay

From the 6th April 2019 employees can earn up to £166 a week commonly known as “free pay”. At £166 per week there is no liability to Tax or National Insurance for the employee or the employer, based on the assumption that the employee is on a standard tax code

It is beneficial to the employee to earn at least £118 a week the lower earnings limit (LEL)

Employees with gross earnings at £118 a week will in most cases qualify for  statutory payments

Prolonged periods of earning below £118 will minimise the employee’s entitlement to some state benefits and have an impact on their state pension.

Employees with gross earnings below the £118 will not qualify for any statutory payments

Lower Earnings Limit (LEL) Employee
Weekly – £118
Monthly – £512
Annually – £6,136

Employees with gross earnings at or above the LEL will qualify in most cases for statutory payments, even though no contributions are made by the employee or the employer. At or above the LEL threshold the employee will gain a credit towards their state pension.

Primary Threshold (PT) Employee
Weekly – £166
Monthly – £719
Annually – £8,632

All employees under state retirement age will suffer national insurance deductions on gross earnings over the PT.

The Secondary Threshold (ST) Employer
Weekly – £166
Monthly – £719
Annually – £8,632

Over the ST the employer will make a secondary contribution to all employee’s national insurance, including employee’s over state retirement age, but excluding employee’s under 21 or under 25 if they are an Apprentice

Upper Earnings Limit (UEL), Upper Secondary Threshold (UST) and Apprentice Upper Secondary Threshold (AUST)Employee
Weekly – £962
Monthly – £4,167
Annually – £50,000

Over the UEL, UST and AUST thresholds both the employer and the employee will suffer an additional national insurance deduction, apart from employee’s over state retirement age.

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