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National insurance

2002/03
For tax year 2002/2003 the rate of employer&#39s Class 1 National Insurance contributions reduces from 11.9% to 11.8%. The employee&#39s rate will be 10%.

The threshold above which employers and employees pay contributions is at £89 per week and the threshold above which the self-employed pay Class 4 contributions is £4,615.

Details of National Insurance contributions for tax year 2002/2003 are given in the Appendix to this report.

2003/04
The expected rises in National Insurance have been deferred until the 2003/04 tax year. At that time the Chancellor has proposed that

  • The employees primary Class 1 rate of National Insurance rate will increase by 1% to 11% on earnings between the primary threshold and upper earnings limits.
  • Employees will, in addition, pay 1% Primary Class 1 National Insurance on all earnings above the upper earnings limit.
  • Employers Secondary Class 1 contributions rate on earnings above the secondary threshold will increase by 1% to 12.8%.
  • The self employed Class 4 rate on profits between the lower and upper profits limit will increase by 1% to 8%.
  • The self employed will, in addition, pay Class 4 contributions at a rate of 1% on all profits over the upper profits limit.

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