The Chancellor announced in his April 2002 Budget that there would be a 1% increase in the rate of NICs for employees, employers and the self-employed from 6 April 2003.
The detailed NIC rates, earnings limits and thresholds proposed for 2003/04 are set out below.
| National insurance rates |
2003/04 |
2002/03 |
| Employees’ threshold | £89 pw | £89 pw |
| Employers’ threshold | £89 pw | £89 pw |
| Upper earnings limit - employees only | £595 pw | £585 pw |
| Employees’ Class 1 rate on earnings between threshold and upper earnings limit | 11% | 10% |
| Employees’ Class 1 rate on earnings above upper earnings limit |
1% | - |
| Employers’ Class 1 rate on earnings above threshold | 12.8% | 11.8% |
| Class 2 – self-employed flat rate | £2 pw | £2 pw |
| Class 2 – small earnings exception | £4,095 pa | £4,025 pa |
| Lower profit limit (for self-employed Class 4 contribution) | £4,615 | £4,615 |
| Upper profits limit | £30,940 | £30,420 |
| Class 4 rate on profits between lower and upper profits limit | 8% | 7% |
| Class 4 rate on profits above upper profits limit | 1% | - |
| Class 3 – voluntary | £6.95pw | £6.85pw |
Although employees’ NICs only become payable once earnings exceed £89 per week, any earnings between £77 and £89 per week in 2003/04 will protect an entitlement to basic state retirement benefits without incurring a liability to NIC.