By Ashley Preen
July 7, 2022
National Insurance is mandatory in the UK; it pays for certain benefits and the state pension. Whether you are employed or self-employed, our guide will give you the ins and outs
National Insurance Contribution is a tax on earnings paid by employees and employers. Whether you have a job or are self-employed, it can help you get benefits like the State Pension and Maternity Allowance.
Your employment status and income determine the class you pay for.
The table below explains each class according to your employment status and earnings
|National Insurance Class||Employment Status|
|Class 1||Your employer will automatically deduct your pay if you earn more than £242 a week and are under State Pension age.|
|Class 1A or 1B||Employers directly fund these through employee expenses or benefits|
|Class 2||Self-employed persons with yearly profits of at least £6,725 or more. |
If your income is below this amount, you may choose to make voluntary payments to close or prevent gaps in your National Insurance record.
|Class 2||You may make voluntary contributions to fix or prevent gaps in your National Insurance record.|
|Class 4||Self-employed individuals making £11,909 or more in annual earnings|
The following table shows each National insurance class and benefits.
|Class 1||Class 2||Class 3|
|Basic State Pension|
|Additional State Pension|
|New State Pension|
|Contribution-based Jobseeker's Allowance|
|Contribution-based Employment and Support Allowance|
|Bereavement Support Payment|
You must pay National Insurance if you are 16 or older and:
You can request a National Insurance number if:
You will need to apply for a National Insurance number to ensure all contributions made are recorded against your name
Can't find your NI number? You can find it( lost national insurance number)
It never changes and is composed of letters and numbers.
Your National Insurance number may be found here:
Your employment status and income determine the amount you pay.
|Class||Income||National insurance rate||How to pay|
|1||£242 to £967 a week (£1,048 to £4,189 a month)||13.25%||With your taxes, you pay National Insurance. Your boss will take it out of your pay before they pay you, and your contributions will be listed on your pay slip|
|1||Over £967 a week (£4,189 a month)||3.25%||With your taxes, you pay National Insurance. Your boss will take it out of your pay before they pay you, and your contributions will be listed on your pay slip|
|2||Depends on profits||-||Contributions are made via your self-assessment|
|4||Depends on profits||-||Contributions are made via your self-assessment|
Need help with your self-assessment? Speak to one of our specialists
If you are employed and do some self-employed work too, the following will happen
From April 6, 2022, to April 5, 2023, NI contributions go up by 1.25 per cent due to the health and social levy
The HMRC will impose penalties if you do not pay your National Insurance on time. The penalty is 5% for each period missed, therefore ranging from 5%-15%.
You can view your National Insurance record online and be able to see:
The importance of making national insurance contributions cannot be stressed enough. Not only do you avoid any penalties for late payment, but you also ensure that you do not create any gaps in your record and therefore miss out on all the benefits of making these contributions.