If you’re a worker or employee over 16 and earning above £157 per week, or are self-employed and generating a taxable profit in excess of £6,025 per year – you will pay National Insurance. The amount you pay depends on your employment status and how much you earn.
Find out more about National Insurance contributions, why you pay it and how much you pay.
Why Do I Pay National Insurance?
National Insurance is paid by the majority of the workforce in order to qualify for certain state benefits. Your National Insurance Contributions (NIC’s) go towards the funding of state benefits and services including:
- The National Health Service
- State pensions
- Unemployment benefits (JSA)
- Sickness and disability allowances
- Bereavement benefits
How Much National Insurance Do I Pay?
Your National Insurance contributions are based on how much you earn and what your employment status is. The current NI classes and rates for the 2017/2018 tax year are as follows:
Current Rates 2017/2018
What Contributions Go Towards
|Class 1 NI is the most common class of NIC; it is paid by those over 16 that are earning in excess of £157 per week and is deducted directly from an employees’ payslip.||12% on earnings between £157 and £866 per week. 2% on earning over £866 per week.|
|Class 1 contributions go towards jobseekers allowance, state pensions, maternity allowances, bereavement benefits.|
|Class 2 is paid by the self-employed earning more than £6,025 per year. Classes 2 & 4 are usually paid through self assessment.*||£2.85 per week||Class 2 contributions count towards the same as class 1 with the exception of Jobseeker’s allowance and any additional state pension.|
|Class 3 is voluntary contributions; these are paid to fill any gaps in your NI record to ensure you are eligible for the full state pension when the time comes. Gaps in NI contributions can be caused by being unemployed, low earnings and living / working abroad. Any gaps in your NI record can be found in your personal tax account||£14.25 per week||Class 3 contributions go towards bereavement benefits and basic state pensions.|
|Class 4 is paid by the self-employed earning profits in excess of £8,164 per year in addition to class 2 contributions.||9% on profits between £8,164 and £45,000. 2% on profits over £45,000||Class 4 NIC’s don’t usually count towards any state benefits|
*If you are self employed and earn less than £6,025 per year, you will not be required to pay NI but may wish to make voluntary contributions.
Calculate Your NIC’s
The tool below can be used to give you a rough estimate of the National Insurance you will pay based on your employment status and income in the 2017/18 tax year.
How Do I Pay National Insurance?
If you are an employee or worker, your employer will deduct National Insurance Contributions from your payslip along with your income tax – you can see how much you have paid on your payslip.
If you are self–employed, you’ll pay class 2 /class 4 NI dependent on your profits – all self-employed people do this through Self Assessment. If you are self-employed and confused about National Insurance, take a look at our NI guide for the self-employed.
Where Can I Find My National Insurance Number?
Your National Insurance number is present on many important documents, notably those regarding employment. Your National Insurance number will be required by a number of organisations including HMRC, your employer, your local council, student loan companies, your bank and local electoral registration officers. You can find your NI number in the following places:
- On your payslip
- On your P60 end of year certificate
- Letters from HMRC
- On the ‘national insurance’ section of your personal tax account
You will be sent a National Insurance number before you turn 16, your National Insurance number will stay with you the rest of your life and will never change. If you have lost your National Insurance number you can call the National Insurance enquiries helpline on 0300 200 3500.
Need A Hand?
National Insurance can be confusing for both employees and the self-employed. For more information on any aspect of NI contributions, self assessment or payroll, give one of our expert team a call on 0117 3790810.
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This post was written by Megan Webb