National Insurance category letters

Your employer runs payroll with two things from HMRC: a tax code, which sets Income Tax, and a category letter, which sets National Insurance. The letter is the less known of the two and the one that decides whether an employer pays 15% National Insurance on an under-21’s pay or nothing at all up to £50,270. This page lists every letter on gov.uk’s category-letters page for 2026/27, with what each side pays; the mariner letters (G, P, Q, R, T, W and Y), which HMRC publishes separately in CA42, are not covered. The National Insurance calculator and the salary calculator both take the letter as an input.

The standard letters

Thresholds for 2026/27: Primary Threshold £12,570 (£1,048 a month), Upper Earnings Limit £50,270 (£4,189 a month), employer Secondary Threshold £5,000. Every letter is assessed on each pay period against that period’s own thresholds, not on the year’s total.

Letter	Who (gov.uk wording)	Employee pays	Employer pays
A	All employees apart from those in groups B, C, H, J, M, V and Z in this table	8% to the UEL, 2% above	15% above £5,000
B	Married women and widows who have a certificate of election form showing they’re entitled to pay reduced National Insurance	1.85% to the UEL, 2% above	15% above £5,000
C	Employees over the State Pension age	nil	15% above £5,000
H	Apprentices under 25	8% to the UEL, 2% above	0% to £50,270, then 15%
J	Employees who can defer National Insurance because they’re already paying it in another job	2% to the UEL, 2% above	15% above £5,000
M	Employees under 21	8% to the UEL, 2% above	0% to £50,270, then 15%
V	Employees who are working in their first job since leaving the armed forces (veterans)	8% to the UEL, 2% above	0% to £50,270, then 15%
Z	Employees under 21 who can defer National Insurance because they’re already paying it in another job	2% to the UEL, 2% above	0% to £50,270, then 15%
X	Employees who do not have to pay National Insurance, for example because they’re under 16	nil	nil

Freeport and Investment Zone letters

These apply only to eligible employees working in a special tax site within a Freeport or an Investment Zone; gov.uk is explicit that someone who works in a Freeport but not in a special tax site gets a different letter. The employee side is the same as the standard letter it mirrors. The employer side is 0% up to £25,000 a year (£2,083 a month), just under half the £50,270 the under-21 and apprentice letters get, then 15%.

Letter	Who (gov.uk wording)	Employee pays	Employer pays
F	All employees who work in a special tax site within a Freeport, apart from those in groups I, L, and S in this table	8% to the UEL, 2% above	0% to £25,000, then 15%
I	Married women and widows working in a special tax site within a Freeport who have a certificate of election form showing they’re entitled to pay reduced National Insurance	1.85% to the UEL, 2% above	0% to £25,000, then 15%
L	Employees who work in a special tax site within a Freeport and can defer National Insurance because they’re already paying it in another job	2% to the UEL, 2% above	0% to £25,000, then 15%
S	Employees who work in a special tax site within a Freeport and are over the State Pension age	nil	0% to £25,000, then 15%
N	All employees who work in a special tax site within an Investment Zone, apart from those in groups E, D and K in this table	8% to the UEL, 2% above	0% to £25,000, then 15%
D	Employees who work in a special tax site within an Investment Zone and can defer National Insurance because they’re already paying it in another job	2% to the UEL, 2% above	0% to £25,000, then 15%
E	Married women and widows working in a special tax site within an Investment Zone who have a certificate of election form showing they’re entitled to pay reduced National Insurance	1.85% to the UEL, 2% above	0% to £25,000, then 15%
K	Employees who work in a special tax site within an Investment Zone and are over State Pension age	nil	0% to £25,000, then 15%

What the letter changes, and what it does not

• Your take-home, only under the reduced-rate letters (B, E, I), the deferment letters (D, J, L, Z) and the nil letters (C, K, S, X). Everything else - A, H, M, V, F, N - pays the standard employee rates, so switching between them on the salary calculator moves the cost-to-employer line and nothing above it.
• Nothing about Income Tax. The letter and the tax code are set independently; a wrong letter does not change the tax code and vice versa.
• State Pension qualifying years. Under every letter that charges Class 1, earnings from the Lower Earnings Limit (£6,708, £129 a week) to the Primary Threshold are treated as paid for the record even though nothing is deducted - HMRC’s NIM01007 - so M, H and V build a year exactly as A does. The reduced-rate letters (B, E, I) are the exception: gov.uk says a holder’s State Pension will be reduced.
• Directors. The letter still applies, but a director in post at the start of the tax year has an annual earnings period (one appointed mid-year gets a pro-rata one), so the per-period thresholds above are replaced by the annual ones. The National Insurance calculator has an annual option for this.

If the letter looks wrong

The commonest error is an employee who turned 21 or an apprentice who finished their apprenticeship still on M or H, which under-charges the employer, or a new starter under 21 put on A, which over-charges the employer. Neither changes the employee’s own deduction. The employer corrects it through payroll; gov.uk’s category-letters page is the reference. The payslip guide shows where the letter sits and what else on the slip should agree with it.