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Employer and employee National Insurance Contributions (NICs) are usually collected via the PAYE system, where a liability to pay NICs exist (6.1). An individual may wish to pay voluntary NICs if a liability to pay compulsory NICs does not exist. Voluntary NICs are not collected through the PAYE system (6.4).

In some limited circumstances, direct collection of compulsory NI from the employee may be appropriate. This is discussed in 6.1.3.

NI is categorised according to seven different classes, and in the context of employment, the following three are the most relevant:

1. Ìý

   •ÌýÌýÌýÌý Class 1 – paid by both employees and employers on earnings from employment (SSCBA 1992, s 1)

2. Ìý

   •ÌýÌýÌýÌý Class 1A – paid by employers only, on benefits awarded to certain employees

3. Ìý

   •ÌýÌýÌýÌý Class 1B – paid by employers only, on PAYE Settlement Agreements (PSAs) (4.8)

Payments by employees are referred to as primary contributions and those paid by employers are called secondary contributions.

Class 1

Class 1 is paid on earnings which include:

1. Ìý

   •ÌýÌýÌýÌý cash payments

2. Ìý

   •