National Insurance Contributions
National Insurance (NI) is a system of taxes paid by employees and employers and is used primarily to fund state benefits. Employers will need to pay Class 1A NIC on the Benefit in Kind value of company cars and free personal fuel, Employees do not pay NIC on these benefits.
Questions you may ask:
- What is the impact of NI with regards company cars?
- How is the tax collected?
- Do employees pay National insurance on all their earnings?
How it works?
National Insurance payments are paid on earnings above the weekly earnings primary threshold for people in employment and on profits above the Small Profits Threshold (SPT) or Lower Profits Limit (LPL) dependant up the applicable National Insurance Class.
Please see details in the table below.
NI Class | Payable By | NATIONAL INSURANCE | 2024/25 | 2025/26 | ||
|---|---|---|---|---|---|---|
| Threshold | Rate | Threshold | Rate | ||
Class 1 | Employees under State Pension age | Class 1 (employment) Weekly earnings Primary threshold | Up to £242 | 0% | Up to £242 | 0% |
Between Primary & Upper Limit | £242 to £967 | 8% | £417 | 8% | ||
Weekly Upper Earnings threshold | £967 | 2% | £967 | 2% | ||
Class 1A or 1B | Employer's | Employer Provided Benefits | £0 upwards | 13.8% | £0 upwards | 15% |
Class 2 | Self Employed | Small Profits Threshold (SPT) | Up to £6,725 | £0 | Up to £6,725 | £0 |
Class 2 weekly flat rate above SPT | Above £6,725 | £3.45 | Above £6,725 | £3.45 | ||
Class 3 voluntary contributions that count towards your total contribution record | Employees or Self Employed if: 1. you're not working, 2. you're not liable for, or you're exempt from, Class 1 or Class 2 contributions, 3. your contributions for a specific year aren't enough to count towards state pension entitlement, 4. you live abroad | Class 3 (Voluntary Contribution) per week |
| £17.45 |
| £17.75 |
Class 4 | Self Employed | Lower Profits Limit (LPL) | Up to £12,570 | 0% | Up to £12,570 | 0% |
Upper Profits Limit (UPL) | Between £12,570 and £50,270 | 6% | Between £12,570 and £50,270 | 6% | ||
Above UPL | Above £50,270 | 2% | Above £50,270 | 2% | ||
The information provided is based on existing and proposed legislation as at November 2024 (30th October 2024 UK Government Autumn Statement). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.