What is it?
You are required to pay national insurance in the UK if you are over the age of 16 and earn more than £184 per week, or are self-employed and earn a profit of £6515 per annum. You must have a national insurance number to be able to make contributions- this usually arrives a few months before your 16th birthday.
Your NI number is unique to you and never changes, it can be used as a way to track your previous employment with the Department for Work and Pensions and HMRC and to ensure the tax you pay is accurately recorded. It can also be used as identification as proof of a right to work in the UK. If you are unemployed or self-employed but not earning enough to contribute you may have gaps in your NI record, to avoid this you are able to contribute voluntarily.
What is it contributed for?
National Insurance contributions count towards benefits and pensions as stated in the table below:
| Class 1: Employees | Class 2: Self-Employed | Class 3: Voluntary Contributions | |
|---|---|---|---|
| Basic State Pension | Yes | Yes | Yes |
| Additional State Pension | Yes | No | No |
| Contribution-based jobseeker’s allowance | Yes | No | No |
| Contribution-based employment & support allowance | Yes | Yes | No |
| Maternity allowance | Yes | Yes | No |
| Bereavement support payment | Yes | Yes | No |
| New state pension | Yes | Yes | Yes |
The table below shows the current national insurance employee rates (2021/2022 tax year):
| Category letter | £120- £184 a week (£520-£797 a month) | £184.01-£ 967 a week (£797.01-£4189 a month) | Over £967 a week (Over £4189 a month) |
|---|---|---|---|
| A | 0% | 12% | 2% |
| B | 0% | 5.85% | 2% |
| C | N/A | N/A | N/A |
| H | 0% | 12% | 2% |
| J | 0% | 2% | 2% |
| M | 0% | 12% | 2% |
| Z | 0% | 2% | 2% |
For example; if you are in category A and earn £900 a week you will pay nothing on the first £184. And then 12% of your earnings between £184.01- £967. If you earn over £967 and are in category A you will pay an extra 2% of your earnings that are above £967.
The table below shows the current national insurance rates for employers. (2021/2022 tax year):
| Category Letter | £120-£170 a week (£520-£737 a month) | £170.01-£967 a week (£737.01-£4189 a month) | Over £967 a week (£4189 a month) |
|---|---|---|---|
| A | 0% | 13.8% | 13.8% |
| B | 0% | 13.8% | 13.8% |
| C | 0% | 13.8% | 13.8% |
| H | 0% | 0% | 13.8% |
| J | 0% | 13.8% | 13.8% |
| M | 0% | 0% | 13.8% |
| Z | 0% | 0% | 13.8% |
National Insurances classes
There are 4 different types of national insurance classes, the type you are required to pay is dependent on your employment status and how much you earn.
Class 1- Employees who earn more than £184 a week and under the state pension age (65)- They will be deducted by your employer.
Class 1A/1B- Employers pay these to their employee’s expenses or benefits.
Class 2- Self-employed people earning profit of £6515 per annual. However, if you earn less profit than this you can choose to pay voluntary contributions to avoid gaps in your NI record.
Class 3- These are voluntary contributions which you can choose to pay if you want to avoid gaps in your record.
Class 4- Self-employed people who earn more than £9569 or more in profit.
For more information on national insurance head over to: Gov.uk
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