National Insurance (NI)
National Insurance (NI) is a contribution paid to HMRC by employees, their employers, and self-employed people. The purpose of the National Insurance is to qualify people for certain benefits and the state pension.
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 £8,632 a year | Your employer deducts it through PAYE | 12% (or 2% if you earn over £50,000 a year) |
| Class 1A or 1B | Employers for employees earning over £8,632 a year | Your employer pays it on top of your Class 1 | 13.8% |
| Class 2 | Self-employed people earning over £6,365 a year | Through a Self Assessment tax return | Flat £153.40 per year |
| Class 3 | Voluntary contributions – you can pay them to fill gaps in your NI record | Through a Direct Debit | £15 per week |
| Class 4 | Self-employed people earning over £8,632 a year | Through a Self Assessment tax return | 9% (or 2% if you earn over £50,000) |