For tax year 2002/2003 the rate of employer's Class 1 National Insurance contributions reduces from 11.9% to 11.8%. The employee's 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.
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.