Check if you need to amend your payroll for female employees who pay less National Insurance
Married women’s and widows’ reduced rate of National Insurance
HM Revenue and Customs (HMRC) as part of the April 2025 employer bulletin has provided reminders and further details to guidance to help employers check the eligibility of employees who pay the married women’s and widows’ reduced rate of National Insurance, sometimes called the ‘small stamp’.
They are reminding employers to check the employee’s date of birth and gender are correct and that they are eligible to pay the reduced rate of National Insurance before submitting a payroll Full Payment Submission (FPS).
Following a change to the HMRC tax system, if the employee’s date of birth is not valid the employer will get an error message and need to check and select another National Insurance category for them, to submit the FPS.
Paying less National Insurance
If a female employee gives their employer a ‘certificate of election’ form, she may be able to pay less National Insurance.
..married women born before 6 April 1961 could choose to pay less National Insurance..
Employers are requested to check the details on the certificate against this updated guidance. The guidance payroll for female employees who pay less National Insurance states that married women born before 6 April 1961 could choose to pay less National Insurance until 1977, when the scheme ended.
If your employee opted in before it ended, she can keep paying a reduced rate.
The guidance also explains which National Insurance category letter to use for the employee’s full payment submission (FPS), with different letters for eligible employees paying the reduced rate according to their place of work.
The National Insurance rate and categories letter table also specifies that only eligible employees should be given the National Insurance category letter for paying the married women’s and widows’ reduced rate.
The majority will use category B for the reduced rate. The additional categories and letters to be used where this reduced rate would apply for those eligible are:
- E — if you are claiming Investment Zones National Insurance relief
- I — if you are claiming Freeport National Insurance relief
- T — if your employee is a mariner on a foreign-going vessel
What about females not on reduced rate?
Payroll for female employees who pay less National Insurance gives more information on what action you need to take if they want to stop. This includes changing your employees’ National Insurance category letter, usually to A, or as follows:
- N — if you are claiming Investment Zones National Insurance relief (you will need to report the location postcode)
- F — if you are claiming Freeport National Insurance relief (you will need to report the location postcode)
- V — if you are claiming Veterans National Insurance Contribution relief
- R — if your employee is a mariner on a foreign-going vessel
The National Insurance Number suffix letter
The employee National Insurance number has a trailing suffix letter A, B, C or D. These represent filing quarters for National Insurance Stamp cards. A practice that ended many years ago.
Stamp cards for class 1 (employed) contributions persisted until 1975 when these contributions finally ceased to be flat-rate and became earnings related, collected along with Income Tax under the PAYE procedures. Making NI contributions is still often described by people as paying their stamp.
Mistakenly in the past, some employers thought that the trailing character represented the NI contribution letter, resulting in some employees not paying primary NICs (letter C) and some men or females born after 5th April 1961 being mistakenly placed into NIC category B in error.
Fixing an error
If an employer has mistakenly applied a reduced contributions NIC category in error, then a correction is required. Remove the incorrect NIC information and apply the correct calculations under a new correct NIC category entry.
Within the relevant tax year this can be corrected in the next regular FPS submission. For prior years there may be a requirement to send corrective end of year FPS Year to date corrective submission with payment of the missing contributions. For prior year underpayments, there may also be an interest charge.
Employers who need to correct an employee’s National Insurance category letter can find further information on how to fix problems.
PAYadvice.UK 21/4/2025