How National Insurance Works

National Insurance is a tax paid by most UK workers. Read on to learn about National Insurance including what it pays for, how to find your National insurance number, where to check how much you’ve paid, and how contributions could affect your State Pension.

Connor Campbell, Kristina Fox Last updated on 20 April 2022.
How National Insurance Works

You can pay National Insurance (NI) through your wages if you are an employee or via a self-assessment tax return if you are self-employed. The amount you need to pay depends on factors including the type of work you do.

National Insurance is paid by both employees in a pay-as-you-earn (PAYE) system and self-employed workers. The amount of National Insurance you need to pay depends upon which system you’re in, how much you earn, and your personal circumstances.

Not everyone has to pay National Insurance. It's important to know how much you should be paying to avoid paying too much or too little.

What is National Insurance?

National Insurance is a tax paid by most workers and the amount you pay depends upon the type of work you do and how much you earn.

It’s a set amount taken off your wages, either automatically if you are in the PAYE system, or by making a payment through a self-assessment tax return if you’re self-employed. You can find out the current rates for paying National Insurance on the government website.

Some people do not pay it, including those who are at state pension age or on low wages.

What is the National Insurance contribution rate?

How much you pay in National Insurance depends on both how much you earn, and whether you are employed or self-employed.

Rates have increased for the tax year 2022/23 due to the introduction of the Health and Social Care Levy. This means you will pay more National Insurance this year than previously.


If you’re employed, you will pay Class 1 contributions through PAYE.

For the financial year starting 6 April 2022, in general the National Insurance rate for employees is 13.25% on income of £9,880 to £50,270 a year (£823 to £4,189 a month). It is then 3.25% for any income over £50,270 a year (over £4,189 a month).

From July 2022, the National Insurance threshold is rising. You will only pay National Insurance contributions on income of £12,570 or more.


For the financial year starting April 2022, you will pay Class 2 contributions of £3.15 a week if your profits total £6,725 or more a year.

If you make a profit of £9,881 or more a year, you will also have to pay Class 4 contributions. The rate is 10.25% on annual profits between £9,881 and £50,270, and 3.25% on any profit over £50,270.

» MORE: What does the rise in National Insurance mean for me?

What does National Insurance pay for?

National Insurance is different from income tax.

The money paid for National Insurance goes into a government fund that is used to pay for a number of benefits and pensions, such as the State Pension,and Maternity Allowance.

To qualify for benefits such as the State Pension, you need to have paid National Insurance contributions for a set period – usually 10 qualifying years. If you haven’t done this, it is possible to make voluntary payments so that you’ll get a State Pension or can increase the amount you’ll receive.

How can you find your National Insurance number?

In the UK, you are usually automatically sent a National Insurance number in the three months before you turn 16. If you don’t receive one, you can call HM Revenue and Customs (HMRC) for advice on 0300 200 3500. You will need to make a new application online if your parents did not fill out a Child Benefit Form for you.

If you have lost your National Insurance number, you can usually find it on financial documents, such as letters from HMRC or on pay slips.

Each National Insurance number is unique. The number will tell the government how much tax you have paid and therefore how much you will receive through your State Pension.

How to check your National Insurance record

You can check how much you’ve paid in National Insurance at any time online, on the government website. It will give you details including the following:

  • All the National Insurance you have paid throughout your life.
  • If you have received any National Insurance credits and how much they are worth.
  • Any gaps in contributions such as years when you didn’t pay National Insurance.
  • How you can pay voluntary contributions and how much they will cost.

What happens if I don't pay National Insurance?

If you are employed, any National Insurance contributions you owe will be taken out of your pay before you receive it.

On the other hand, if you’re self-employed, it is your responsibility to work out how much National Insurance you owe as part of your self-assessment tax return. You should pay it along with any other taxes you owe by 31 October for paper returns or by 31 January deadline of the following year for online returns.

If you do not pay your tax or National Insurance on time, you can face a penalty for paying late, plus interest on the amount you owe.

Can I make voluntary National Insurance contributions?

You may be eligible to make voluntary National Insurance contributions. For example, if you want to fill gaps in your NI record. You can usually pay to fill gaps from the last six years.

You may want to do this to make sure you receive your full state pension, or if you are self-employed and want to apply for Maternity Allowance.

Not everyone can make voluntary contributions – it depends on your personal circumstances. You can check for more details, or contact HMRC if you need help.

How many years of contributions are needed for a full state pension?

You will need at least 10 ‘qualifying years’ of contributions or credits to be eligible for a State Pension. To claim the full amount, you may need more depending on your personal circumstances.

If you have no National Insurance record before 6 April 2016, you will need to make contributions for 35 years to get the full state pension when you retire.

Whether you are looking to be eligible for some state pension or the full amount it’s important to note that these qualifying years don’t need to be consecutive years and you can make voluntary payments, which can count towards your entitlement.

You may be able to claim National Insurance credits if you do not pay contributions. For example, if you are ill and cannot work, or if you care for someone. If you are a parent or carer of a child under the age of 12, you will automatically receive National Insurance credits as long as you claim Child Benefit – even if you don’t receive any payments.

These credits go on your record and can help ensure you are still entitled to a State Pension.

If you’ve made fewer than 35 years’ worth of contributions and there are gaps in your National Insurance record, you will get a State Pension based upon the amount you’ve paid in. This could be less than the full amount. You may be able to make voluntary contributions to fill these gaps and protect your entitlement to the full amount of State Pension.

You can see how much State Pension you are likely to get based on your credits and contributions and view your National Insurance record at

Who qualifies for National Insurance credits?

You may qualify for National Insurance credits but this depends upon your circumstances – for example, if you are a parent or carer of a child aged under 12 and claim Child Benefit or if you are receiving other benefits, such as Jobseeker’s Allowance or Statutory Maternity or Paternity Pay.

You may need to apply for these credits, though in some circumstances they are added to your National Insurance record automatically.

More information about who is eligible to receive National Insurance credits and how to claim them is available at

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About the authors:

Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more

Kristina is a writer at NerdWallet. A recent graduate trading French for finance, she has experience creating content for student newspaper Cherwell and an edtech company. Read more

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