As well as Income Tax, you have to pay National Insurance (NI) on earned income or self-employed profits, above a certain threshold. The money raised helps to fund the NHS, State Pensions and a range of social security benefits.
National Insurance contributions (NICs) build your entitlement to benefits such as Maternity Allowance, Job Seekers Allowance and the State Pension; to qualify for the full pension, you will need to have made contributions for a minimum number of years (currently 35).
National Insurance Number
You need a National Insurance number when you start work – it is used to ensure your tax and contributions are recorded properly, to track your tax allowances, and to work out how much State Pension you receive when you retire. UK residents are normally assigned an NI number just before they turn 16.
You can find it on your payslip, P60, letters from or your personal tax account.
When do You Pay National Insurance?
Employers, company employees and self-employed workers all have to pay into the scheme.
You pay contributions if you are between 16 and state retirement age, and your earnings from employment or from business profits are above a certain threshold:
2022 – 2023 tax year
- From April: Employees earning over £190 a week (£9,880 a year). From 6th July, the threshold increases to £12,570, in line with the Personal Allowance for income tax.
- From April: Self-employed, making business profits of £6,725 or more per year. In July the threshold increases to £11,908.
The type (‘class’) of NICs and the amount you contribute depends on your employment status and how much you earn, and whether you have any gaps in your contributions. National Insurance rates and allowances are complex, so to check what you should pay, see National Insurance contributions – GOV.UK
Have You Paid the Right Amount of NI?
If you have one job paid through PAYE, National Insurance contributions are fairly straightforward.
But there are many circumstances where you might have temporarily stopped paying into National Insurance, which could jeopardise your entitlement to benefits e.g. if your work fluctuates, you have taken a career break, or have been unemployed. You may be able to make up the shortfall with credits or voluntary contributions.
There are other situations where you might be overpaying (e.g. if you have more than one job) and you could be due a refund.
Note that unlike with Income Tax, HMRC do not inform you about NI overpayments/underpayments.
The onus is on each individual to check your NICs and make sure you are paying the correct amount.
National Insurance contributions enquiries: 0300 200 3500
National Insurance credits
You might be eligible for NI credits if you’re not paying into the scheme e.g. because you are unemployed, ill or acting as a carer. Credits can help fill gaps in your National Insurance record, building up the necessary ‘qualifying years’ that count towards your State Pension and other benefits. Some credits are allocated automatically (e.g. if you’re receiving Universal Credit), or you may have to apply for them.
If you are not currently paying into National Insurance, or you have gaps that do not qualify for credits (e.g. because you were living abroad or your earnings were below the NI threshold), you may be able to pay voluntary NICs (Class 2 or 3, depending on your circumstances) to fill the gaps (usually up to the past 6 tax years).
It’s worth keeping an eye on your contributions, particularly if your earnings fluctuate (e.g. freelancing), so you don’t lose out on your full pension when you retire.
In certain situations, it’s worth checking to see if you have paid too much and could be due a refund e.g. if you have more than one job where you pay NICs, or you’re employed but also do freelancing, or your self-employed profits are below the threshold.
If you have overpaid, it just means that your contributions are added to your NI record, and will count towards your qualifying years for the relevant benefits. However, it might be possible to claim a refund (but only for overpayments in the last 3 years).
How do You Pay National Insurance?
NI contributions are collected in the same way as Income Tax: deducted automatically via PAYE (Pay As You Earn scheme) if you work for an employer, or paid through Self-Assessment if you’re self-employed.
Find out more:
What is National Insurance? – Which?
Includes video (2 minutes) & calculator to work out your NI bill
National Insurance – GOV.UK
Overview, including what you pay & where to get help