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Effect on National Insurance contributions if you’re an employee

If you're an employee and you, or your employer, hold a valid 'certificate of election' - form CA4139, form CF383 or form CF380A - you can pay reduced rate Class 1 National Insurance contributions.

The amount you pay depends on how much you earn. The reduced rate for the 2012-13 tax year is:

• if you earn more than £146 and up to £817 a week, you pay 5.85 per cent on the amount you earn compared to the full rate of 12 per cent
• if you earn more than £817 a week, you also pay an extra 2 per cent on all your earnings over £817

Example

Marie earns £350 a week. She pays reduced rate Class 1 National Insurance contributions of 5.85 per cent on £204 (£350 - £146), which is £11.93 a week.

Sarah earns £1,000 a week. She pays reduced rate Class 1 National Insurance contributions of 5.85 per cent on £671 (£817 - £146) of her earnings, which is £39.25. She also pays an extra 2 per cent on the difference between £817 and £1,000 (£183), which is £3.66. The total amount she pays each week is £42.91 (£39.25 + £3.66).

• Check current National Insurance contributions rates on the HMRC website Opens new window

• National Insurance for the employed

Effect on National Insurance contributions if you’re self-employed

If you’re self-employed and you hold a valid 'certificate of election' - form CA4139, form CF383 or form CF380A - you don't need to pay any Class 2 National Insurance contributions. But you may have to pay Class 4 contributions if your annual taxable profits are over a certain amount. You pay 9 per cent on profits between £7,605 and £42,475 and a further 2 per cent on profits over that amount.

• Check current National Insurance contributions rates on the HMRC website Opens new window

Effect on your entitlement to state benefits

Reduced rate Class 1 National Insurance contributions don't count towards 'contributory benefits' like the basic State Pension and bereavement benefits. So if you’ve chosen to pay these (when an employee) or not to pay Class 2 contributions (when self-employed) you won't normally be able to claim benefits based on your own contributions record. However, you may still be able to get some benefits based on your husband's (or your late husband's) contributions.

For more information on how reduced National Insurance contributions affect your entitlement to state benefits, follow the link below.

• Giving up your right to pay reduced National Insurance

Applying for a ‘certificate of election’

If, for whatever reason, you don’t have a certificate of election but you think you are entitled to one, fill in:

• form CF9 if you’re a married woman
• form CF9A if you’re a widow

You can download these forms from the HM Revenue & Customs (HMRC) website. Or you can call the National Insurance Enquiries for Individuals Helpline on 0845 302 1479. The helpline is open from 8.00 am to 5.00 pm, Monday to Friday except bank holidays.

Send your form to HMRC at:

National Insurance Contributions Office
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

• Widow's application for a certificate of election of reduced liability or to change to full liability (PDF, 87K) Opens new window

• Married woman's application for a certificate of election of reduced liability or change to full liability (PDF, 84K) Opens new window

• Help with PDF files

Losing the right to pay reduced contributions

You'll lose your right to pay reduced Class 1 National Insurance contributions (when an employee) or not to pay Class 2 contributions (when self-employed) if you:

• get divorced
• have your marriage annulled

You'll also lose the right if, for two consecutive tax years, you haven't:

• had any earnings on which Class 1 contributions are payable or ‘treated as paid’
• been self-employed

If you're an employee

If you're an employee and you lose your right you'll need to:

• tell your employer you're no longer entitled to pay reduced rate Class 1 contributions
• get back your certificate of election from your employer
• fill in the relevant part of the certificate and send it to:
  HMRC
  National Insurance Contributions Office
  Benton Park View
  Newcastle upon Tyne
  NE98 1ZZ

If you don't tell your employer:

• you may be held responsible for any underpayment of National Insurance contributions
• it may affect your future entitlement to benefits

If you're self-employed

If you're self-employed and you lose your right you'll need to:

• register to pay Class 2 National Insurance contributions
• fill in the relevant part of your certificate of election and send it to:
  HMRC
  National Insurance Contributions Office
  Benton Park View
  Newcastle upon Tyne
  NE98 1ZZ

You must contact HMRC as soon as you're due to pay Class 2 contributions. Otherwise you may have to pay a penalty.

If you become a widow

If you're widowed you don't automatically lose your right to pay reduced contributions. You may be able to keep your right for a certain period after the date when your husband died. For more information, call the National Insurance Enquiries for Individuals Helpline on 0845 302 1479. The helpline is open from 8.00 am to 5.00 pm, Monday to Friday except bank holidays.

More useful links

• Employee tax and National Insurance

• Voluntary National Insurance contributions - the basics

• Married Couple's Allowance (includes civil partnerships)