Beginning on April 6, 2026, the State Pension Age (SPA) will be gradually raised from 66 to 67. After SPA is reached, employee class 1 national insurance contributions (NICs) are no longer due, so employers must exercise caution.
Age of pension
SPA will be reached by men and women born between April 6, 1960, and March 5, 1961, at age 66 plus a predetermined number of months. A person born on May 5, 1960, for instance, will reach SPA on June 5, 2026, while someone born one day later will do so on July 6, 2026. For those born on or after March 6, 1961, the pension age will be 67.
Class 1 NICs
Employer contributions are still required even though employee class 1 NICs are no longer due after an employee reaches SPA:
- The first wage or salary payment made to employees on or after SPA is reached is subject to the change. The date of payment, not the earnings period, determines NIC classification.
- For instance, if an employee reaches SPA on or before June 30, 2026, NIC category letter C will be used for the entire June 2026 salary (paid at month’s end).
- To ensure that no more employee class 1 NICs are deducted, employers should verify that the employee’s NI category letter has been set to “C” in payroll software. Depending on the employee’s birthdate, the software might perform this automatically.
The normal procedure is for the employee to show proof of reaching SPA, either with their birth certificate or passport.
The NICs situation on reaching SPA is simpler for self-employed people. After reaching SPA, they simply cease paying class 4 NICs at the beginning of the tax year.
The government’s “check your SPA calculator” can be used to determine SPA can be found here. You can discuss payroll services with our team of accountants in Barnsley.