UK National Insurance Categories Explained

Every payslip carries an NI category letter that sets the rates and thresholds the employer applies to that employee. The letter is determined by age, employment status, multiple-employment deferment, and a small set of other criteria. Categories matter most at age transitions (21, 25 for apprentices, State Pension Age) and for employees with multiple jobs.

This guide covers the main category letters used in 2026/27, what each does to the rates, and the practical points where employees most commonly need to query their category.

Category A: the default

Category A is the standard letter for an employee under State Pension Age who is not in any other special category. Employee Class 1 main NI is 8% on weekly earnings between the Primary Threshold (GBP 242 weekly, GBP 1,048 monthly) and the Upper Earnings Limit (GBP 967 weekly, GBP 4,189 monthly), with 2% on earnings above. Annual equivalents: PT GBP 12,570, UEL GBP 50,270.

The employer also pays secondary Class 1 NI at 13.8% on earnings above the Secondary Threshold (GBP 175 weekly, GBP 758 monthly, GBP 9,100 annual). The Employment Allowance of GBP 10,500 (raised from GBP 5,000 from April 2025) reduces the secondary bill for many smaller employers; from April 2025 all eligible employers can claim regardless of size, with specific exclusions for single-director companies under ELIGIBILITY_ASSESSMENT_RULES.

Worked example: a category A employee on GBP 36,000 paid monthly. Each month GBP 3,000. NI base GBP 3,000 less GBP 1,048 = GBP 1,952. At 8% = GBP 156. Annual GBP 1,874. Employer secondary on GBP 3,000 less GBP 758 = GBP 2,242 at 13.8% = GBP 309 a month, GBP 3,716 a year before any Employment Allowance offset.

Edge case: the State Pension Age in 2026/27 is 66 for both men and women, with a phased rise to 67 between 2026 and 2028. Category A applies until the day before SPA; the day after moves to category C automatically through payroll systems with HMRC's date-of-birth data.

Categories H and M: age-based employer reliefs

Category H applies to apprentices under 25 who are on an approved apprenticeship framework or standard. The employee pays standard NI (8% / 2% as category A); the employer pays no secondary Class 1 NI up to the Upper Secondary Threshold for Apprentices (also at the UEL level of GBP 50,270 annual). The relief was introduced to encourage apprenticeship hiring.

Category M applies to employees under 21 (without an apprenticeship framework). The employer pays no secondary Class 1 NI up to the Upper Secondary Threshold for Under 21s, again aligned with the UEL. The employee continues to pay category A rates on their own contributions.

The categories transition automatically through payroll on the relevant birthday. Category M moves to A on the day of the 21st birthday. Category H moves to A on the day of the 25th birthday or on the day the apprenticeship framework ends, whichever is sooner.

Worked example: a 20-year-old earning GBP 26,000 in category M produces employee NI of (GBP 26,000 less GBP 12,570) at 8% = GBP 1,074. Employer secondary is zero up to the UEL. On the 21st birthday the category switches to A; the employer's secondary NI becomes 13.8% on earnings above GBP 9,100, an annual cost increase of around GBP 2,330. The employee's own NI is unchanged.

Category C: over State Pension Age

Category C applies to employees who have reached State Pension Age. The employee pays zero NI on their own earnings regardless of amount. The employer continues to pay secondary Class 1 NI at 13.8% above the Secondary Threshold (GBP 9,100 annual). The intent is that NI is the State Pension premium paid during working life; once entitled to State Pension, the employee's contribution ends.

Voluntary Class 3 NI contributions can still be made by category C employees to fill earlier gaps in the NI record. Class 3 is GBP 17.45 a week (2024/25) and produces qualifying years toward the State Pension. The extended transitional window for buying back years up to 2018 closes on 5 April 2025.

Worked example: a 67-year-old working part-time on GBP 18,000. Employee NI: zero (category C). Employer secondary: GBP 18,000 less GBP 9,100 at 13.8% = GBP 1,228. Income tax: standard PA applies, so GBP 5,430 at 20% = GBP 1,086. Take-home GBP 16,914 plus State Pension on top.

Edge case: SPA is rising from 66 to 67 between April 2026 and March 2028 under the Pensions Act 2014 timetable. Specific transition dates depend on date of birth; the gov.uk State Pension Age checker confirms the date for each individual.

Categories J and Z: deferment for multiple jobs

An employee with multiple simultaneous employments may pay NI in each employment up to the UEL in each, potentially exceeding the annual maximum. The deferment scheme under the Social Security (Contributions) Regulations 2001 allows the employee to apply for deferment in one or more employments, reducing the rate in the deferred employment to 2% from the first pound.

Category J applies to category A employees with deferment. Category Z applies to under-21 employees (category M base) with deferment. The employee applies through HMRC using form CA72A. Where deferment is granted, HMRC issues a deferment certificate to the relevant employer, who then applies the deferred rates.

Where deferment has not been granted but combined earnings exceed the UEL, the employee can claim a refund of overpaid NI from HMRC after the tax year end using form CA5610 or by review through the PTA. The refund covers the 8% versus 2% differential on the relevant slice of earnings.

Worked example: an employee with two jobs each paying GBP 40,000 annual. Without deferment, each employer deducts 8% on (GBP 40,000 less GBP 12,570 PT) = GBP 2,194 per job, totalling GBP 4,389. Combined annualised income GBP 80,000, of which GBP 50,270 is below UEL and GBP 29,730 above. The correct annual NI is 8% on GBP 37,700 (PT to UEL) = GBP 3,016 plus 2% on GBP 29,730 = GBP 595, totalling GBP 3,611. Refund due GBP 778.

Other categories: married women, mariners, share fishermen

Historical category B (married women with reduced rate election) covers women who elected before 11 May 1977 to pay reduced NI. The category still exists but applies to a shrinking cohort of women now in their late 60s and older. Reduced rate is 1.85% versus the standard 8%.

Mariners and share fishermen have specific categories (F, I, K, R) reflecting their distinct contribution arrangements under the Mariners' Regulations. Most employees will not encounter these unless working in the maritime sector.

Category X applies to employees who do not pay NI at all (under the LEL of GBP 6,500, or specific exemptions). The category is used in payroll to indicate the employee is below the threshold; no contributions are due.

Practical action: checking the category letter on a payslip at age transitions (21, 25 for apprentices, SPA) is the most useful audit step. An incorrect letter past the transition date over-charges or under-charges NI and produces P800 reconciliation adjustments later. The PTA displays the current NI position and helps query categorisation errors.

Frequently asked questions

What does NI category A mean?

Category A is the standard letter for an employee under State Pension Age with no other special status. Employee Class 1 main NI is 8% on weekly earnings between the Primary Threshold (GBP 242, equivalent to GBP 1,048 monthly) and the Upper Earnings Limit (GBP 967 weekly, GBP 4,189 monthly), with 2% on earnings above. Employer secondary is 13.8% above the Secondary Threshold (GBP 9,100 annual). Most UK employees are in category A.

Why is my category H or M?

Category H means the employee is an apprentice under 25 on an approved apprenticeship framework. Category M means under 21 without an apprenticeship. Both categories give the employer relief from secondary Class 1 NI up to the UEL, encouraging the hiring of younger workers. The employee's own NI is unchanged (8% / 2% as category A). The category transitions automatically on the relevant birthday (21 for M, 25 for H or earlier if the apprenticeship ends).

Do I pay NI after State Pension Age?

No. Category C applies to employees over State Pension Age, and the employee pays zero National Insurance regardless of how much they earn. The employer continues to pay secondary Class 1 NI at 13.8% above the Secondary Threshold. The NI exemption is automatic through payroll based on date of birth. State Pension Age is 66 in 2026/27, rising to 67 between April 2026 and March 2028 for those born from 6 April 1960 onwards.

Can I get a refund on overpaid NI?

Yes if combined earnings across multiple employments exceeded the annual NI maximum. Form CA5610 or a review through the Personal Tax Account after the tax year end produces a refund of the differential between the 8% rate paid in each job and the 2% rate that should have applied on the slice above the UEL. The deferment scheme using form CA72A allows the same outcome prospectively, reducing the rate in one employment to 2% from the first pound.

What does category J mean on my payslip?

Category J is the deferment version of category A. It applies where the employee has applied for and been granted NI deferment because of multiple simultaneous employments. The deferred employer applies a 2% rate from the first pound of earnings rather than 8%. This avoids the employee paying NI multiple times on the slice between PT and UEL in each employment. Deferment is requested through form CA72A from HMRC, with a certificate issued to the employer.