Exact percentage method

The separate employee and employer Class 1 calculations and statutory nearest-penny rule.

Separate exact-percentage calculation and rounding

Reviewed · Current · Implementation rule · From 6 April 2024

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Calculate the employee and employer contributions separately, round each to the nearest penny, and discard an exact halfpenny or less.

Sterling applies the exact statutory percentages to integer-pence earnings bands. A fraction greater than half a penny rounds up; an exact halfpenny rounds down. CA38 manual lookup tables can differ from the exact-percentage result and are not substituted into this calculation.

Exceptions and branches

• This does not implement the director annual or alternative method.
• It does not calculate PAYE Income Tax or any other payroll deduction.

Worked examples

For category A non-director pay of £1,000 weekly in 2026–27, employee earnings between £242 and £967 use 8%, and the £33 above £967 uses 2%. The employee contribution is £58.66. Employer earnings above £96 use 15%, producing £135.60.

For £5,000 monthly, employee earnings between £1,048 and £4,189 use 8%, and the £811 above £4,189 uses 2%, producing £267.50. Employer earnings above £417 produce £687.45.

Regulation 12 requires the primary and secondary results to be calculated and rounded separately. More than a halfpenny rounds up; an exact halfpenny or less is discarded. CA38 manual lookup tables can differ from the exact-percentage result, so the method must be explicit.

This reviewed seam never calculates PAYE Income Tax, runs payroll, submits RTI, posts a journal or pays HMRC.

Related concepts

• Class 1 National Insurance

• Class 1 National Insurance rates and thresholds

Linked from

• Class 1 National Insurance

• Class 1 National Insurance rates and thresholds

Sources

• Social Security (Contributions) Regulations 2001, regulation 12 — Regulation 12(1). Primary authority.

• NIM11002 — Exact percentage method and rounding. Official guidance.

• 2026 to 2027: Employer further guide to PAYE and National Insurance contributions — Sections 1.7 and 3. Official guidance.

• CA38: National Insurance contributions tables A and J, 2026–27 — Pages 3 to 10 and category A weekly and monthly tables. Official guidance. Link-and-cite; publisher-hosted.

How sources are ranked

Knowledge version: sterling-knowledge@2026-09-11.7. Last checked 11 September 2026.