Update National Insurance categories

The amount of National Insurance your company and your employees pay is determined by their National Insurance categorization. This categorization is determined by a number of factors. As an employer, you must ensure that your employees are categorized correctly.

Before you begin

The amount of National Insurance an employee pays depends partially on their age.

• Category X - This NI category is exclusively for employees under the age of 16.
• Category M - This NI category is exclusively for employees under the age of 21.
• Category H - This NI category is exclusively for apprentices under the age of 25.
• Category Z - This NI category is exclusively for employees under the age of 21 who can defer NI as they already pay it in another job.
• Category C - This NI category is for employees over the state pension age.

How to update National Insurance categories

UK Payroll will notify you when an employee’s National Insurance details must be updated when an employee reaches an NI age threshold.

An alert will appear on the Overview page.

1. Click View employees > Update NI category.
2. Update the category from the National Insurance category drop down.
3. Click Save changes.

FAQs

Why is my employee not paying National Insurance contributions?
There are several reasons why an employee may not be paying NI contributions, including:

• The employee has reached state pension age and is in NI Category C.
• The employee is under the age of 16 or is not liable to pay NI, and is in NI Category X.
• The employee is a company director and is on the Standard Method for NI. To learn more, see Add a company director.

For more information on National Insurance Categories, see HMRC’s guidance on National Insurance rates and categories. For more information on thresholds, see HMRC’s guidance on National Insurance Contribution rates.

Why does my employee have no employer National Insurance contributions?
There are several reasons why an employee may not receive employer National Insurance contributions, including:

• The employee is under the age of 21, has earnings below the Upper Earnings Limit, and is in NI Category M.
• The employee is an apprentice under the age of 25, has earnings below the Upper Earnings Limit, as is in NI Category H.
• The employee is under the age of 21, has more than one job, and is in NI Category Z.
• The employee is under the age of 16 or is not liable to pay NI, and is in NI Category X.
• The employee is a company director and is on the Standard Method for NI.