What is National Insurance?

National Insurance
National Insurance (or NI) is paid by employers, employees and self-employed people. Our National Insurance contributions build up our entitlement to state benefits such as a State Pension or Job Seeker’s Allowance.

HMRC expects National Insurance contributions once you are 16 or older and earn above £157 per week as an employee or are self-employed and making a profit of £6,025 or more per year (figures correct for 2017/18 tax year). Rates and thresholds for National Insurance are set at the start of every tax year and can be found on HMRC’s website.

You have to have a National Insurance number to pay NI contributions. HMRC usually sends out your National Insurance number your 16th birthday. Your National Insurance number is unique to you; it is used to ensure your contributions and tax are recorded to you only.

The type (or Class) of National Insurance you pay depends on how much you earn, whether you are employed or self-employed and whether there are any gaps in your National Insurance contributions to date.

Broadly speaking there are four Classes of National Insurance
  • Class 1 National Insurance is paid by employees earning more than £157 per week. Class 1 NI contributions are deducted from wages by the employer.
  • Class 1A or 1B National Insurance contributions are paid by employers once an employee earns over a certain amount.
  • Class 2 National Insurance is paid by self-employed people earning more than £6,025 per year.
  • Class 3 National Insurance contributions are voluntary. You can choose to pay Class 3 NI if you are self-employed and earn less than £6,025 per year, or you have missed National Insurance contributions in the past and want to ‘top up’.
  • Class 4 National Insurance is paid by self-employed people whose profits exceed £8,164 per year.

How do I pay my National Insurance?

National Insurance is usually paid through your wages, or your Self Assessment Tax Return if you are self-employed. If you are already a Numberworx customer, your dedicated bookkeeper will talk you through your tax position and liability, including National Insurance, as an included part of our service.

Can we help?

If you have any questions regarding your National Insurance contributions, or the class of National Insurance you pay, don’t hesitate to ask.