Since the beginning of the new tax year many of you may have noticed an unfamiliar NI letter on your payslip. This is because HMRC have introduced 7 new categories for NI this year to coincide with the abolishment of employers NI contributions for employees under 21.
As you would expect with this being a change relating to an employee’s age, this will only take effect if an employer has accurate information for their employees, specifically their dates of birth. The NI letter you will be put on depends on a number of factors, hence the need for so many new category letters.
So what letter applies to you? The original A, B, C and D letters remain and still have the same meanings, but the new letters are as follows:
M = Not contracted-out standard rate contributions for employees under 21
Z = Not contracted-out deferred rate contributions for employees under 21
Y = Mariners not contracted-out standard rate contributions for employees under 21
P = Mariners not contracted-out deferred rate contributions for employees under 21
V = Mariners contracted-out salary related contributions for employees under 21
I = Contracted-out salary related standard rate contributions for employees under 21
K = Contracted-out salary related deferred rate contributions for employees under 21
The good news is that although your employee NI contributions won't be reduced, your entitlement to statutory social security benefits like state pension won't be affected.
If you think you are on the wrong NI letter, please check with your employer that they have the correct information for you. It is the responsibility of your employer to ultimately ensure you are on the right NI letter.
For more information on the new NI categories please click here.