National Insurance (NI) categories determine the rate of NI that employees and employers pay. The category has varying factors, but the most common is the employee's age.

The following table explains the correct NI category to use:

Category	Employee Group
A	They don't fall into any other category, the default category.
B	They're a married woman or widow entitled to pay reduced NI.
C	They're over state pension age.
D	Your business operates in an Investment Zone, AND they've deferred paying National Insurance at the main rate because they pay it in another job.
E	Your business operates in an Investment Zone, AND they're a married woman or widow entitled to pay reduced NI.
F	Your business operates in a Freeport, AND they don't fall into any other category.
H	They're an apprentice under the age of 25.
I	Your business operates in a Freeport, AND they're a married woman or widow entitled to pay reduced NI.
J	They've deferred paying National Insurance at the main rate because they pay it in another job.
K	Your business operates in an Investment Zone, AND they're over state pension age.
L	Your business operates in a Freeport, AND they've deferred paying National Insurance at the main rate because they pay it in another job.
M	They're under the age of 21.
N	Your business operates in an Investment Zone, AND they don't fall into any other category.
S	Your business operates in a Freeport, AND they're over state pension age.
V	They're in their first year of employment after leaving the armed forces (Veteran).
X	They're under 16 years of age Or they don't pay NI for another reason.
Z	They're under the age of 21 AND have deferred paying National Insurance at the main rate because they pay it in another job.

The impact of the NI category

Each category impacts:

If the employee is liable to pay National Insurance
If the employer is liable to pay National Insurance
The rate of National Insurance that is due
How much the employee can earn before the employee or employer pays NI

Over the last two years, the rates and thresholds have changed frequently. For the existing rates and thresholds, please refer to HMRC's website.

Changing NI categories in PayFit

When you add an employee to PayFit, the default NI category is assigned automatically.

For NI categories based on the employee's age (C, M, or X), these are assigned automatically when you enter the employee's date of birth.

For other categories (B, H, J, V, X, and Z), you'll need to choose from a list of relevant circumstances and select whether your business operates in a Freeport, Investment Zone, or neither, so PayFit can assign the correct category. You can find this under the Employment tab of the employee's record, under the HMRC information section.

Note: In some cases, you'll need to ask the employee for proof of their eligibility for the reduced NI rates.