What each letter means
GOV.UK lists the letters and leaves the choice to the employer, who needs the employee's correct date of birth and circumstances to pick it. These are the ones a small employer meets:
| Letter | Who it is for | Employee rate above PT |
|---|---|---|
| A | All employees not in another group | 8%, then 2% |
| B | Married women and widows with a reduced-rate election certificate | 1.85%, then 2% |
| C | Employees over State Pension age | None |
| H | Apprentices under 25 | 8%, then 2% |
| J | Employees deferring NI because they pay it in another job | 2% |
| M | Employees under 21 | 8%, then 2% |
| V | Veterans in their first civilian job | 8%, then 2% |
| Z | Employees under 21 deferring NI | 2% |
| X | Employees who do not pay NI, for example under 16 | None |
Letters F, I, L and S do the same jobs for staff at a Freeport special tax site, and N, E, D and K for an Investment Zone site.
One letter, £207 a month
A 19-year-old earns £1,800 a month. Their own NI is the same under A or M: (£1,800 − £1,048) × 8% = £60.16. The difference is yours. Under A you would pay (£1,800 − £417) × 15% = £207.45 of employer NI. Under M the employer rate is 0% up to £4,189 a month, so you pay nothing.
Get the letter wrong and the FPS reports the wrong NI, which you then correct on a later submission. The employee's 21st birthday moves them from M to A, so date of birth has to be on file from day one.
Where the letter appears
GOV.UK tells employees they can find their category letter on their payslip. It usually sits next to the National Insurance number in the header, labelled NI letter, NI category or NIC table. An employee who thinks it is wrong should ask the employer first, since the employer chose it.
Read next
Related terms
Questions
What does category A mean on my payslip?
It is the standard letter for employees who are not in any special group. In 2026/27 it means 8% employee NI between £242 and £967 a week, 2% above, and 15% employer NI above £96 a week.
Who chooses the National Insurance category letter?
The employer, from what it knows about the employee: age, apprenticeship, State Pension age, a reduced-rate certificate or deferment. GOV.UK says it is the employer's responsibility to use and report the correct letter.
What happens to the letter when an employee turns 21?
It changes from M to A, or from Z to J for a deferring employee. Payroll software makes the switch from the date of birth on file, and employer NI then applies above the £96 weekly secondary threshold instead of the under-21 upper threshold.
Sources
- GOV.UK: National Insurance rates and categories, category letters (read 8 October 2026)
- HMRC: Rates and thresholds for employers 2026 to 2027 (read 8 October 2026)
Figures are for the 2026/27 tax year unless the text says otherwise. This page explains a payroll term; it is general information, not tax or legal advice.