1 Employed earners
1.1 Class 1 contributions
(a) Class 1 NIC is paid by employees and employers
The contributions begin when the employee is aged 16 or over. For 2011/12 the rate of employee Class 1 NIC is at 12%. It is paid where cash earnings exceed a threshold of £7,225 per annum, but only up to an upper limit of £42,475 per annum, however for earnings above £42,475 per annum there is a rate of 2% payable with no limit. The contributions cease when the employee reaches 60 (women) and 65 (men).
The rate of employer Class 1 NIC is 13.8%. It is paid on cash earnings that exceed a threshold of £7,072 per annum. These
are payable from the employees 16th birthday – but there is no upper age limit.
1.2 Class 1A Contributions
The rate of Class 1A NIC is payable by employers on taxable benefits provided to employees. The rate is 13.8% multiplied by the value of the benefits.
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