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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.
You’ll pay the tax if you’re 16 or over and are either:
Employers also pay National Insurance for their employees who earn over £242 per week.
Once you reach the state pension age, you don’t need to pay NI at all.Â
Different taxpayers pay different kinds of National Insurance, called ‘classes.’
| NI class | Who pays? | How? | How much is it? |
| Class 1 | Employees earning more than £242 per week who are under State Pension age a year | Your employer deducts it through PAYE | 10% (or 2% if you earn over £262 a week) |
| Class 1A or 1B | Employers | Your employer pays it on top of your Class 1 | 14.53% |
| Class 2 | Self-employed people earning over £6,725 a year until 2024/25 | Through a Self Assessment tax return | Flat £3.45 per week (scrapped from 6 April 2024) |
| Class 3 | Voluntary contributions – you can pay them to fill gaps in your NI record | Through a Direct Debit | £17.45 per week |
| Class 4 | Self-employed people earning over £12,570 a year | Through a Self Assessment tax return | 6% (or 2% if you earn over £50,270) |
Heads up! From April 2025, employers will see their National Insurance contributions increase by 1.2% to 15% and the threshold for when these contributions kick in will drop from £9,100 to £5,000.
🚨For the full scoop on this year’s Autumn Budget, check out our blog. 🚨
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.Â
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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