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National Insurance (NI)

  • 2 min read

National Insurance (NI) is a contribution paid to HMRC by employees, their employers, and the self-employed. The purpose of National Insurance is to qualify people for certain provided benefits such as the State Pension.

Who pays National Insurance?

You’ll pay the tax if you’re 16 or over and are either:

  1. In employment and are earning above £190 a week
  2. Self-employed and making a profit of £6,725+  a year

Employers also pay National Insurance for their employees who earn over £189 per week.

Once you reach the state pension age, you don’t need to pay NI at all. However, this is set to change in April 2022, with the government announcing a health and social care levy. Workers of state pension age will pay the levy from the following year. Rishi Sunak also made changes to NI thresholds in his 2022 Spring Statement, which take effect from July 2022.

The National Insurance classes

Different taxpayers pay different kinds of National Insurance, called ‘classes.’

NI class Who pays How is it paid How much is it
Class 1 Employees earning more than £189 per week who are under State Pension age a year Your employer deducts it through PAYE 13.25% (or 3.25% if you earn over £262 a week)
Class 1A or 1B Employers for employees earning over £189 per week Your employer pays it on top of your Class 1 15.05%
Class 2 Self-employed people earning over £6,725 a year Through a Self Assessment tax return Flat £164 per year
Class 3 Voluntary contributions – you can pay them to fill gaps in your NI record Through a Direct Debit £15.85 per week
Class 4 Self-employed people earning over £9,568 a year Through a Self Assessment tax return 10.25% (or 3.25% if you earn over £50,270)

How to pay your contributions

If you’re employed then National Insurance will be automatically deducted from your monthly pay. However, if you’re self-employed, then you need to pay these contributions yourself. This is usually done through your Self Assessment tax return. 

Whether you’re employed or self-employed, it’s important to make sure that you have the right tax code, so that you’re not underpaying or overpaying NI and Income Tax.

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