National Insurance Explained
Understanding NI contributions, classes, and what they fund
What is National Insurance?
National Insurance (NI) is a tax on earnings that contributes to your entitlement to certain state benefits, including the State Pension. It's collected alongside Income Tax through PAYE if you're employed, or through Self Assessment if you're self-employed.
Class 1 - Employees
If you're employed and earn more than £12,570 a year, you pay Class 1 NI contributions.
| Annual Income | Employee Rate | Employer Rate |
|---|---|---|
| Up to £12,570 | 0% | 0% |
| £12,571 to £50,270 | 12% | 13.8% |
| Over £50,270 | 2% | 13.8% |
Employer NI
Employers pay an additional 13.8% on earnings above £9,100. This is on top of your salary and not deducted from your pay, but it represents the true cost of employing you. For example, if you earn £30,000, your employer pays approximately £2,591 in employer NI.
Class 2 & 4 - Self-Employed
If you're self-employed, you pay two types of NI:
Class 2 NI
- Flat rate of £3.45 per week (£179.40 per year)
- Only if your profits are £6,725 or more
- Counts towards State Pension and some benefits
- Collected through Self Assessment
Class 4 NI
- 9% on profits between £12,570 and £50,270
- 2% on profits over £50,270
- Doesn't count towards benefits, just a tax on profits
- Collected through Self Assessment
Other NI Classes
Class 3 - Voluntary
£17.45 per week to fill gaps in your NI record. Useful if you haven't paid enough NI to qualify for full State Pension.
Class 1A & 1B - Benefits in Kind
Paid by employers on benefits like company cars. Not deducted from your pay.
What Do NI Contributions Pay For?
Your NI contributions fund several key services and build your entitlement to certain benefits:
State Benefits
- State Pension
- Maternity Allowance
- Bereavement benefits
- Employment and Support Allowance
Public Services
- NHS funding
- Other public services
NI and Your State Pension
To get the full State Pension, you need 35 qualifying years of NI contributions. You need at least 10 qualifying years to get any State Pension.
Current State Pension (2024/25)
- Full State Pension: £221.20 per week (£11,502.40 per year)
- State Pension age: Currently 66 (rising to 67 by 2028)
- You can check your State Pension forecast at gov.uk/check-state-pension
When Do I Stop Paying NI?
You stop paying NI when you reach State Pension age, even if you continue working. You should receive a letter from HMRC with a new tax code showing you no longer pay NI.
Calculate Your NI Contributions
Use our National Insurance Calculator to see how much you'll pay based on your income and employment status.
Calculate NI