The short version: National Insurance (NI) is a tax you pay on your earnings that goes towards state benefits like the State Pension, Jobseeker’s Allowance, and Maternity Allowance. No contributions, no entitlement.
Who pays it?
Employees pay it if they earn above a weekly threshold. Self employed people pay it if their profits are above the annual threshold. Employers also pay NI on top of what employees pay. Once you reach State Pension age, you stop paying.
What are the different classes?
Class 1 is for employees, deducted through PAYE. Class 2 was for self employed people but has been scrapped as a compulsory payment. Class 3 is voluntary contributions to fill gaps in your record. Class 4 is what self employed people now pay on profits above the threshold.
How much do you pay?
Rates and thresholds change regularly. Check gov.uk for current figures. Generally, you pay a percentage of your earnings above the threshold, with the rate dropping once you earn above a higher limit.
Why does it matter?
Your NI record determines your State Pension entitlement and eligibility for certain benefits. Gaps in your record can mean a lower pension later on.
Want to check your NI record or understand what you’re paying? Get in touch and we’ll help you make sense of it.
