Glossary · UK
What is National Insurance Category Letters?
Single-letter codes that appear on payslips indicating which National Insurance contribution rate applies to an employee, based on their employment status and circumstances.
Full Definition
National Insurance category letters are single-letter codes assigned by HMRC to indicate which set of NI contribution rates applies to an employee in a given pay period. The most common categories are: A -- the standard rate for most employed workers not in any other category (employee 8% on earnings between the Primary Threshold and Upper Earnings Limit, 2% above; employer 13.8% on earnings above the Secondary Threshold, for 2025/26); B -- married women and widows who have a valid election to pay reduced-rate NI (a legacy right); C -- employees who are above State Pension age (no employee NI payable, but employer still pays); D -- standard rate employees in a contracted-out defined benefit pension scheme (historically used; contracting-out for defined benefit schemes ended April 2016); H -- apprentices under 25 (zero employer NI up to the Upper Secondary Threshold); J -- employees who can defer NI because they already have a second job with earnings above the Upper Earnings Limit; M -- employees under 21 (zero employer NI up to the Upper Secondary Threshold); Z -- employees under 21 who can defer NI. The category letter is used by payroll software to calculate the correct employee and employer NI amounts. Employees should check that the correct letter appears on their payslip, as an incorrect category can result in either overpayment or underpayment of NI.