You can pay National Insurance (NI) through your wages or via a self-assessment tax return.
Not everyone has to pay National Insurance and some people are exempt, so it’s important to know how much you should be paying so you don’t pay too much or too little.
What is National Insurance?
National Insurance is a tax paid by most workers. It’s either paid as a set amount automatically taken off your wages if you are an employee in a pay-as-you-earn (PAYE) system, or by making a payment through a self-assessment tax return if you are self-employed.
The amount of National Insurance you need to pay depends on which system you’re in, how much you earn, and your personal circumstances. You can find out the current rates for paying National Insurance via Gov.uk.
Some people do not pay it, including those who are at the state pension age, and some on low wages.
How much is National Insurance?
How much you pay in National Insurance depends on how much you earn and your employment status.
The Class 1 rate of National Insurance contributions (NICs) for employees is currently:
- 12% on income of £12,570 to £50,270 a year (£1,048 to £4,189 a month)
- 2% on income over £50,270 a year (over £4,189 a month)
- 0% on your first £12,570
From 6 January 2024, Class 1 NICs for employees will be cut from 12% to 10%.
Your National Insurance contributions are calculated using your annual profits if you’re self-employed.
- The main rate of Class 4 National Insurance contributions is 9% for profits between £12,570 and £50,270, and 2% for any profits over £50,270.
This is on top of the £3.45 a week you pay if your self-employed profits are £12,570 or more.
From 6 April 2024, the main rate of Class 4 self-employed NICs will be cut from 9% to 8% and Class 2 self-employed NICs will be abolished.
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.
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