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 impact your State Pension.

Connor Campbell, Rebecca Goodman Last updated on 07 November 2022.
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How National Insurance Works

You can pay National Insurance (NI) through your wages or via a self-assessment tax return and 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 and some people are exempt, so 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 not. 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 the state pension age, and some 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.


The National Insurance rate for employees is 12% on income of £12,570 to £50,270 a year (£1,048 to £4,189 a month). The rate for any income over £50,270 a year (over £4,189 a month) is 2%.

You do not pay National Insurance on your first £12,570.


If you are self-employed, your National Insurance contributions are calculated using your annual profits. The changes in National Insurance only apply to those self-employed who make more than £9,881 in profits annually.

T The National Insurance rate is 9% for profits between £9,881 and £50,270, and 2% for any profits over £50,270.

This is on top of the £3.15 a week you pay if your self-employed profits are £6,725 or more.

» MORE: What do the changes in National Insurance mean for me?

What does National Insurance pay for?

National Insurance is different from income tax, even though it works in a similar way in that you make a payment to it.

The money paid for this type of insurance goes into a government fund that is used to pay for a number of things including state benefits such as the state pension, statutory sick pay and maternity leave.

To qualify for benefits such as the state pension, you need to have paid National Insurance contributions for a set period. If you haven’t done this, it is possible to make voluntary payments.

How can you find your National Insurance number?

In the UK when you turn 16 you are usually automatically sent a National Insurance number. If you didn’t get one you can apply for a National Insurance number by calling the application line on 0800 141 2075.

If you have lost your National Insurance number, you can usually find it on financial documents such as letters from HM Revenue & Customs (HMRC) or on wage slips.

The government’s Department for Work and Pensions (DWP) handles NI numbers and each one is unique. The number will tell the government how much of the 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 meant to be paying National Insurance but for some reason you have not made a payment, HMRC will usually contact you.

It will do this by letter and will explain that the payment is late. The letter will also give you details of how to pay the money due, when to do it, any penalties you may face, and how to appeal against them.

Is it possible to make voluntary National Insurance contributions?

You can make voluntary contributions for National Insurance at any point. You may want to do this to make sure you receive your full state pension, for example, or if you are self-employed and want to apply for maternity or paternity pay.

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

You need to make contributions for 35 years of contributions or credits to get the full state pension when you retire. These don’t need to be consecutive years and you can make voluntary payments that can count towards your entitlement.

If you’ve made fewer than 35 years’ worth of contributions, you will get a state pension based upon the amount you’ve paid in and if it’s less than 10 years, you may not qualify.

Who qualifies for National Insurance credits?

You may qualify for National Insurance credits but this depends upon your circumstances. For example, if you are receiving benefits such as Jobseekers’ Allowance or receiving maternity or paternity pay.There is a full list of exemptions on the government website.

Image source: Getty Images

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

Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more

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