Payroll Guide
National Insurance category letters: what UK employers need to know
National Insurance category letters are used in payroll to work out how much employee and employer National Insurance is due. Most employees are on category A, but different letters apply depending on age, pension status, deferment, apprenticeships, Freeport and Investment Zone reliefs, and a small number of special cases.
- Most employees use category letter A.
- Standard non-relief letters include A, B, C, H, J, M, V and Z.
- Category X is used where no employee National Insurance is due, for example someone under 16.
- Freeport letters are F, I, L and S.
- Investment Zone letters are N, E, D and K.
- Mariners and deep-sea fishermen have separate HMRC guidance and special category handling.
- Category letters are not the same as National Insurance classes.
The most common category letters
These are the letters most payroll teams see in day-to-day processing.
- A: standard letter for most employees.
- B: married women and widows with a valid reduced-rate election certificate.
- C: employees over State Pension age.
- J: employees with deferred National Insurance because they already pay it in another job.
Younger employees and apprentices
These letters support special employer National Insurance treatment for younger workers and apprentices.
- H: apprentices under 25.
- M: employees under 21.
- Z: employees under 21 who can defer National Insurance because they already pay it in another job.
- If someone qualifies for more than one relief, payroll should follow HMRC’s applicable rules for the correct category.
Category V for veterans
Employers can use a separate category for eligible employees working in their first civilian job after leaving the armed forces.
- V: employees working in their first job since leaving the armed forces.
- This supports the veterans’ employer National Insurance relief.
- It affects how employer contributions are worked out, while normal payroll reporting still applies.
Category letters for Freeport employees
Employers use a separate set of letters for eligible employees who work in a Freeport special tax site.
- F: standard rate for eligible employees in a Freeport.
- I: married women’s reduced rate for eligible employees in a Freeport.
- L: deferred rate for eligible employees in a Freeport.
- S: employees in a Freeport who are over State Pension age.
Category letters for Investment Zone employees
Employers use a different set of letters again for eligible employees working in an Investment Zone special tax site.
- N: standard rate for eligible employees in an Investment Zone.
- E: married women’s reduced rate for eligible employees in an Investment Zone.
- D: deferred rate for eligible employees in an Investment Zone.
- K: employees in an Investment Zone who are over State Pension age.
Category X and separate mariner guidance
Some cases do not fit the usual employee categories and need extra attention.
- X: used where the employee does not have to pay National Insurance, for example because they are under 16.
- Mariners and deep-sea fishermen are covered by separate HMRC guidance.
- HMRC’s wider employer guidance also includes special mariner-related letters such as G, Y and P in certain under-21 or apprentice situations.
- If you run payroll for mariners, use the dedicated HMRC guidance rather than relying only on the standard category-letter table.
What employers should do now
Check that each employee is using the correct category letter in payroll, especially where there are age-based reliefs, apprentice relief, deferment, State Pension age, or site-based reliefs such as Freeports and Investment Zones. It is also worth checking that payroll teams understand the difference between category letters and National Insurance classes.
Tip: employees can usually find their National Insurance category letter on their payslip.
Category letters are not the same as National Insurance classes
Category letters are used by employers in payroll for employees. National Insurance classes are a broader system covering employed, self-employed, voluntary contributions, and employer-paid contributions on certain benefits and settlements.
The main classes commonly referenced are Class 1, 1A, 1B, 2, 3 and 4.
National Insurance category letter FAQs
What is the most common National Insurance category letter?
Category A is the standard letter used for most employees.
Where can an employee find their category letter?
Employees can usually find their National Insurance category letter on their payslip.
What is category X used for?
Category X is used where the employee does not have to pay National Insurance, for example because they are under 16.
Are National Insurance category letters the same as National Insurance classes?
No. Category letters are payroll codes for employees, while National Insurance classes refer to the wider contribution system such as Class 1, 1A, 1B, 2, 3 and 4.
Which letters apply to Freeport employees?
The Freeport category letters are F, I, L and S for eligible employees working in a Freeport special tax site.
Which letters apply to Investment Zone employees?
The Investment Zone category letters are N, E, D and K for eligible employees working in an Investment Zone special tax site.