What are the different types of National Insurance?
National Insurance (NI) is a contribution that you need to pay while employed to qualify for the State Pension and other benefits such as Maternity Allowance and Bereavement Support Payments.
There are different classes of National Insurance contributions and the class each employee pays will depend on their job, age and the amount they earn.
National Insurance is mandatory if you are 16 or over and are either:
- An employee who earns over £242 a week
- Self-employed and make a profit of over £11,908 a year.
Classes of National Insurance
Your employment status and earnings will determine which class of National Insurance you fall under.
Class 1: Your employer automatically deducts your NI as you earn more than £242 a week and are under the State Pension age.
Class 1A or 1B: Employers will pay directly on their employees’ expenses and benefits.
Class 2: Self-employed people who earn more than £11,908 a year in profits.
Class 3: Voluntary contributions – you can pay this to avoid gaps in your NI record.
Class 4: Self-employed people who earn more than £11,909 a year in profits.
Most self-employed people pay their National Insurance through self-assessment.
How much do you pay if you’re employed?
The amount of NI you will pay largely depends on your income.
For employed people who fall under class 1 of NI, you will pay 12 per cent if you earn more than £242 a week and 2 per cent if you earn over £967 a week.
These rates are accurate for the 22/23 tax year.
Contact our tax experts at Sherwin Currid for more advice on National Insurance and how it works.