5 questions you may have about National Insurance
Posted on 1st February 2023
Understanding National Insurance contributions is important in understanding your personal finances and the breakdown of where your money goes each month.
You may see your National Insurance contributions listed on your monthly payslip, if you feel unsure or confused as to what this means we will explain what you need to know in this blog.
What is National Insurance?
Your National Insurance contributions will count towards the benefits and pensions system.
You must pay a certain amount of National Insurance to be eligible for these schemes.
This can include:
• State pension
• Bereavement benefits
• Maternity allowance
• Statutory Sick Pay (SSP)
Who pays National Insurance?
Employers, employees and self-employed workers will pay National Insurance every month.
You will pay National Insurance if you’re 16 or over and are either:
• an employee earning above £242 a week
• self-employed and making a profit of more than £11,908 a year
You do not pay National Insurance, but are eligible for benefits and the State Pension, if you’re either:
• an employee earning between £123 and £242 a week
• self-employed and your profits are between £6,725 and £11,908 a year
How much is National Insurance?
How much and the type of National Insurance you pay will depend on your employment status and income.
You will need to make sure you are paying the right amount of tax, which is determined by your tax code if you are paid via PAYE.
How and when do you pay National Insurance?
Your National Insurance is paid from your salary or earnings. If you are employed, it will be taken out by your employer before you get paid. You can check your National Insurance contributions on your payslip.
If you are self-employed, you will need to make sure you arrange your contributions. This is done via your self-assessment tax return.
You will pay National Insurance when you are working and earning above the prescribed amount. Currently, once you reach the state pension age you will not need to pay National Insurance.
You can check your NI record and find out if you have any gaps. It is possible to make voluntary contributions but to determine if this makes sense for you, it is recommended to seek financial advice.
If you need guidance on National Insurance or financial advice, contact us today.
Tagged as: National Insurance, NI, Pensions, Self Employed
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