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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 £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.
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) |
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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