National Insurance category letters

The National Insurance category letter on your payslip tells payroll which NI rates to charge. Most employees are category A: 8% on earnings between £12,570 and £50,270 a year and 2% above. Other letters cover people over State Pension age, under-21s, apprentices under 25, veterans and a few special cases. Your employer picks the letter from your age and circumstances.

The letters you are most likely to see

These are the categories used for most public sector employees. Employee rates are the same for A, H, M and V, and the difference is what the employer pays.

Letter	Who it is for	Employee pays	Employer pays
A	Most employees	8% from £12,570 to £50,270, 2% above	15% above £5,000
B	Married women and widows with a valid reduced-rate election	Reduced rate of 1.85% from £12,570 to £50,270	15% above £5,000
C	Employees over State Pension age	Nothing	15% above £5,000
H	Apprentices under 25	As A	0% up to £50,270, then 15%
M	Employees under 21	As A	0% up to £50,270, then 15%
V	Veterans in their first civilian job after service	As A	0% up to £50,270, then 15%

Payroll converts the annual figures in the table to weekly or monthly amounts. The employee threshold is £242 a week or £1,048 a month, the employer threshold is £96 a week or £417 a month, and the upper limits are £967 a week or £4,189 a month.

Less common letters

• J: employees who also have another job where they already pay the full employee rate, and who have HMRC approval to defer. They pay a reduced rate on this job; gov.uk has the details.
• Z: the under-21 version of J.
• X: employees who do not have to pay NI at all, for example because they are under 16.
• Freeport letters F, I, L and S, and investment zone letters N, E, D and K: used where the employer is in a designated freeport or investment zone and the job qualifies. The employer pays 0% up to a lower upper threshold of £25,000 a year (£481 a week, £2,083 a month). Few public sector workers will see these.

Category B is closed to new elections. It applies only to women who opted for the reduced rate decades ago and have kept it. An election can lapse, for example after a long enough break from paid work, and HMRC’s rules set out when that happens. If you are on B and unsure why, ask HMRC whether your election is still valid.

How payroll chooses your letter

Your employer decides the category from what it knows about you. Date of birth is the main input. Under 21, you should be on M, and when you turn 21 payroll should move you to A automatically. Apprentices under 25 should be on H. At State Pension age you should move to C, and you may be asked for proof of age.

Veterans’ relief (V) applies to the first civilian employment after leaving the regular armed forces, for a limited period from the start of that job. The employer needs your service leaving date to apply it, so tell HR if it applies. Public sector employers recruiting former service personnel, such as the NHS, police forces and the Civil Service, use it regularly.

When the letter is wrong

The most common errors are:

• staying on A after reaching State Pension age, which means you keep paying 8% when you should pay nothing
• staying on M after turning 21, which only affects the employer and will be corrected later
• being on B without a valid election, which means too little NI and gaps that can affect your State Pension record.

If you have paid NI after reaching State Pension age, tell payroll straight away. They can correct it in the current tax year and refund the difference through your pay. For earlier years, contact HMRC, which can repay overpaid Class 1 contributions.

Each payslip shows your category letter, NI number and NI paid to date. How to read your payslip shows where to find them.

Why under-21 and apprentice letters matter to employers

Large public employers with many young staff and apprentices save a good deal on M, H and V. For an apprentice under 25 earning £20,000, the employer pays no employer NI at all, where a category A employee on the same pay would cost the employer 15% of £15,000, or £2,250. Your take-home pay is unchanged, but the saving is part of why public sector apprenticeships are funded the way they are. See apprenticeships in the public sector and employer National Insurance.