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What Do The Different National Insurance Letters Mean?


Illustration showing symbols (mostly letters) scattered across a flat, coloured surface

Working out your NI liability as an employer can be stressful, especially since there’s not actually a one-size fits all contribution rate for every employee. NI categories dictate the rate of employee and employer national insurance liability, which is why it’s important to understand what each letter refers to.


This blog post walks you through what each NI category letter means and how much you and your employees need to contribute.


National Insurance Number


Before we look at NI categories, it’s important to understand that employees’ NI numbers and categories are different.


Every employee’s national insurance number is unique. It can be confusing when looking at NI numbers and people often ask what the various letters and numbers mean. NI numbers are composed of 2 letters, 6 numbers and another letter on the end.


It’s important to note that the final letter of an employee’s NI number has nothing to do with their NI category.


Why is the NI category letter important for payroll?


An employee’s NI category letter indicates both the employer and employee’s NI liability. Each NI category letter corresponds to a different percentage contribution. And since an employee’s NI contribution is automatically deducted from their pay, it’s critical that employers know which category their employees fall under and how much they have to pay.


Luckily, the majority of employees will fall under NI Code A. And if an employee doesn’t fit into any other category, they’ll also default to category A.

What are the different National Insurance categories?


There are nine different NI category letters, with 4 additional categories for people who work in freeports (areas that are tax-free economic zones).

Category letter

Employee group

A

All employees apart from those in groups B,C, H, J, M, V and Z

B

Married women and widows entitled to pay reduced NI

C

Employees who are over the State Pension age

H

Apprentices under 25

J

Employees who can defer National Insurance because they’re already paying it in another job

M

Employees under 21

V

Employees who are working in their first job since leaving the armed forces (veterans)

Z

Employees under 21 who can defer National Insurance because they’re already paying it in another job

X

Employees who do not have to pay NI, including those who live abroad in certain countries such as in the EU.

Source: https://www.gov.uk/national-insurance-rates-letters/category-letters


NI Category Letters for Employees who Work in Freeports


The below four category letters are for employees who work in freeports:

Category Letter

Employee Group

F

All employees who work in freeports, apart from those in groups I, L and S in this table

I

Married women and widows who work in freeports and are entitled to pay reduced NI

L

Employees who work in freeports and can defer NI because they’re already paying it in another job

S

Employees who work in freeports and are over the State Pension Age

Source: https://www.gov.uk/national-insurance-rates-letters/category-letters


Contributions for each category


As we mentioned, each NI category letter corresponds to a different rate of NI contribution. The following table from the government website outlines the various employee liabilities for each category:


Employee NI rates


The following table tells you the NI percentage contribution each category has to pay:

Category

£123 - £242 (£533 = £1048 a month)

£242.01 - £967 (£1048 - £4189 a month)

Over £967 a week (£4,189 a month)

A

0%

13.25%

3.25%

B

0%

7.1%

3.25%

C

N/A

N/A

N/A

F

0%

13.25%

3.25%

H

0%

13.25%

3.25%

I

0%

7.1%

3.25%

J

0%

3.25%

3.25%

L

0%

3.25%

3.25%

M

0%

13.25%

3.25%

S

N/A

N/A

N/A