You’ll have to pay National Insurance contributions if you’re over 16 years of age and earn or have self-employed profits over a certain amount. This helps build your entitlement to certain benefits, such as the State Pension and Maternity Allowance.

What is National Insurance?

National Insurance contributions are a tax on earnings and self-employed profits paid by employees, employers and the self-employed. They can help to build your entitlement to certain benefits depending whether you are employed or self-employed, such as the State Pension and Maternity Allowance.

Several factors can determine the level and type of national insurance contribution is payable including:

  • employment status
  • age
  • level of earnings
  • residence status

When will I pay National Insurance?

If you are paid through a Pay As You Earn (PAYE) system then National Insurance contributions will be automatically deducted from your salary. Whether you’re paid weekly, monthly, or a different time period if you earn extra in one month, you’ll pay extra National Insurance. You won’t be able to claim the extra back, even if your pay is lower during the other months of the tax year. If you are self-employed your National Insurance contributions will be calculated based on your Self Assessment tax return. They’ll be paid at the same time as Income Tax.

How much is National Insurance?

  • Class 1 is paid by employees and employers
  • Class 2 is paid if you’re self-employed
  • Class 3 is a voluntary contribution
  • Class 4 is paid if you’re self-employed and have profits over a certain amount

How much you’ll pay in National Insurance depends on what kind of National Insurance you’re paying. There are four main classes of National Insurance.

National Insurance Rates

Class 1
If you’re an employee you start paying National Insurance when you earn more than £190 a week (2022/23). The National Insurance rate you pay depends on how much you earn, and is made up of:

  • 13.25% of your weekly earnings between £190 and £967 (2022/23)
  • 3.25% of your weekly earnings above £967.

This includes the Health and Social Care Levy increase, which will be collected through National Insurance during the 2022/23 tax year. From July 2022, the lower threshold for Class 1 NICs will increase to£242 a week (£12,570 a year). This means you will not start paying National Insurance until you earn enough to start paying Income Tax.

For example, if you earn £1,000 a week, you pay:

  • nothing on the first £190
  • 13.25% (£102.95) on the next £777
  • 3.25% (£1.07) on the next £33.

From 6 April 2022, Class 1 NICs will increase temporarily by 1.25% to fund Health and Social Care costs and deal with NHS back logs.
The rate of National Insurance you pay might be lower if you opted into the Married Women’s Reduced Rate before April 1977.
As an employee, your National Insurance contributions stop when you reach State Pension age.

Class 2

If you’re self-employed, you might be able to pay Class 2 contributions instead. Class 2 National Insurance contributions are set at a flat-rate weekly contributions of £3.05 a week in 2021-22 (£3.15 a week in 2022-23). You’ll need to pay them for every week or partial week of self-employment in a tax year. This is if your profits for the entire tax year are £6,515 (the Small Profits Threshold) or more in 2021-22 (£6,725 in 2022-23). Paying Class 2 contributions is voluntary for self-employed people with profits below the Small Profits Threshold. Paying Class 2 National Insurance contributions, even if your profits are lower, can still help you build contributory entitlements to benefits. This can be a specialist area but if you use an accountant to do your books or help with your tax return they will be able to give you some guidance on this.

Class 3

Class 3 voluntary National Insurance contributions are designed to fill in any gaps in your National Insurance record. The aim is to get you a higher State Pension. To receive the full new State Pension, you’ll need to have at least 35 qualifying years of National Insurance contributions. It’s payable to people who have reached their State Pension age on or after 6 April 2016.
Anyone with less than this will receive a reduced State Pension. To receive the new State Pension you need to have a minimum of ten qualifying years. If you don’t have enough qualifying years, you might want to pay Class 3 voluntary contributions to boost your pension entitlement. In 2021-22, Class 3 contributions are payable at a weekly rate of £15.40 (15.85 in 2022/23). This is the maximum you can pay each week. Rates for previous tax years will be different. You might not always be able to pay Class 3 contributions for a tax year.
That’s why it’s important to find out whether:

  • you can make payments towards any gaps
  • how much you’ll need to pay
  • you will benefit from making any voluntary National Insurance contributions.

Class 4

If you’re self-employed and make profits of £9,569 or more in 2021-22 (£9,880 in 2022-23), you’ll pay Class 4 National Insurance contributions. If you’re over this threshold, you’ll pay 9% on profits between £9,559 and £50,270 in 2021-22 (£9,800 and £50,270 in 2022-23).