National Insurance

If you’re over 16 you will have received your NI number and should start to understand where your National Insurance contributions go.

What is National Insurance?

You pay National Insurance contributions in order to build up your entitlement to certain state benefits, including your State Pension.

You will be required to pay National Insurance if you are…

  • Over 16 years old (you will automatically receive your NI number following your 16th birthday).
  • Earning over £166 a week.
  • Self-employed, making a profit over £6,365 a year.

    You will continue to pay National Insurance contributions until you reach the state pension age – which is currently 65 for both men and women (although it is expected to increase to 66 by October 2020).

If you’re employed you pay Class 1 National Insurance contributions.

  • If you earn more than £166 a week and up to £962 a week, you pay 12 per cent of the amount you earn between these amounts.
  • If you earn more than £962 a week, you also pay 2 per cent of all your earnings over £962.

You pay a lower rate if you’re a member of your employer’s contracted-out pension scheme.

Self-employment and National Insurance

If you’re self-employed you pay Class 2 and Class 4 National Insurance contributions.

  • Class 2 National Insurance contributions are paid at a flat rate of £3 a week.
  • Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits – 9 per cent on profits between £8,632 and £50,000, and a further 2 per cent on profits over that amount.

If your profits are expected to be less than £6,365 you may not have to pay Class 2 National Insurance contributions.