The UK Rules
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Overview

National Insurance Contributions Overview

What is National Insurance and what does the NI number mean in the United Kingdom?

NATIONAL INSURANCE 2017/18: Find out how much you pay to the UK Government and HMRC in National Insurance Contributions. Perhaps more important, why do you need to pay NIC?

This section has the current National Insurance rates and classes. You may need this information to check your contributions record.

To qualify for your State Pension and other certain benefits you must pay National Insurance (NI) contributions.

If you are 16 or over and earn above £157 a week, or self-employed making a profit of over £6,025 a year, you pay National Insurance.

To start paying National Insurance Contributions you will need your National Insurance number. To protect your National Insurance record, your NICs are considered paid if you earn between £113 and £157 a week.

National Insurance Classes

NI 'classes' are the different types of National Insurance. The class you pay depends on:

When Do You Stop Paying National Insurance?

You stop paying Class 1 National Insurance when you reach the State Pension age if you are employed. Being self-employed means you stop paying:

National Insurance Classes 1, 2, 3, and 4

Your employment status and earnings determine your National Insurance Class. Gaps in your National Insurance record may also affect NI classes.

National Insurance Class Who Should Pay National Insurance Contributions
Class 1 National Insurance Employees who earn over £157 a week and under State Pension age (NI is automatically deducted by your employer)
Class 1A or 1B National Insurance Employers pay these contributions directly on the expenses or benefits of their employees
Class 2 National Insurance Self-employed people (not compulsory if you earn less than £6,025 a year but you can make voluntary contributions)
Class 3 National Insurance Voluntary contributions (you can pay them to fill or avoid gaps in your National Insurance record)
Class 3A National Insurance Voluntary contribution (used as a state pension top up class 3a with a single lump sum if you can retire before 6 April)
Class 4 National Insurance Self-employed people who earn profits over £8,164 a year

How Much National Insurance Do You Pay?

Your contributions of National Insurance vary by how much you earn and your employment status.

Those who are Employed

Most employees pay Class 1 National Insurance contributions. These are the standard National Insurance rates for the tax year 6th April 2017 to April 5th 2018.

The Amount Your Earn National Insurance Rate Class 1
£157 to £866 a week (£680 to £3,750 a month) 12%
Over £866 a week (£3,750 a month) 2%

Your payments are lower if you are a married woman or a widow with a CA4139 'Certificate of Election'. Apply for a CA4139 by filling in the CF9 form. You also pay less if you have more than one job and want to defer your NI contributions.

Note: Employers' National Insurance Contributions vary depending on the category letters of their employees.

How to Pay Voluntary National Insurance

Your NI contributions are part of your tax payments. Your employer deducts these payments before you receive your wages. The amount you contribute shows on your payslip.

As a Director of a limited company you can also be your own employee. You would pay Class 1 NI contributions through your PAYE system.

Those who are Self-employed

The amount of NI you pay depends on your profits. You might pay Class 2 National insurance Contributions or Class 4 National Insurance Contributions. Payments are usually made through the Government Gateway Self Assessment account.

National Insurance Classes Overview and GuideSpecial rules apply if you have a 'specific job'. These include:

What if you are Employed and Self-employed?

It is possible that you are self-employed and an employee of another company. So being self-employed you will pay Class 2 and Class 4 National Insurance contributions. As an employee you pay Class 1 NI via your PAYE deducted by your employer.

The amount you pay, above your PAYE contributions, depends on your combined income from all your jobs. File your Self Assessment tax return with HM Revenue and Customs (HMRC). They will then determine the amount of National Insurance contributions you must pay.

NI Rules for Landlords, Directors, and Share Fishermen

National Insurance rules vary for the following occupations:

Contact HMRC if you think you have overpaid. They will check your National Insurance record. You can claim a NI refund if you have paid too much National Insurance.

Why Do We Pay National Insurance?

The table shows why we pay National Insurance. The contributions you make count towards some of the benefits entitlements you might get.

Benefits Entitlement Class 1: Employees Class 2: Self-employed Class 3: Voluntary Contributions
Basic State Pension Yes Yes Yes
Additional State Pension Yes No No
New State Pension Yes Yes Yes
Maternity Allowance Yes Yes No
Bereavement Benefits Yes Yes Yes
Contribution-based Jobseeker’s Allowance Yes No No
Contribution-based Employment and Support Allowance Yes Yes No

You can top up your pension using a Class 3 contribution. The most you can pay is £25 per week. As a rule, if you are self-employed and your profits are over £8,164, your Class 4 contributions do not count towards your state benefits.

National Insurance Help for those Not Working

As a rule, gaps in your National Insurance record affect your benefits. You can use National Insurance credits to help fill any gaps and protect your benefits.

You may get National Insurance credits if you are ill and cannot work or caring for someone full time. You can make voluntary contributions, to top up your NI, if you unable to get credits or are out of work.

NI and Change of Circumstance

It is your responsibility to inform HM Revenue and Customs if:

Class 2 National Insurance Contributions and NIC Class 4 Overview