Do I Have to Pay National Insurance?

Last Updated: Mar 16, 2021
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To qualify for some benefits such as the State Pension, you have got to pay National Insurance payments. You are qualified for pay National Insurance if you are:

  • 16 and above
  • self-employed and earning a profit of at least £5,965 yearly
  • A worker making more than £155 weekly

A National Insurance number is needed prior to paying for National Insurance contributions. Should your earnings range between £112 and £155 weekly, your contributions will be viewed to have been paid to safeguard your National Insurance record.

National Insurance or classes

Different kinds of National Insurance are available. The type you pay relies on the status of your employment and the amount of money make, as well as if there are gaps in your National Insurance report.

When you cease to pay

Should you be employed, you cease to pay Class 1 National Insurance by the time you attain the State Pension age bracket.
Should you be self-employed, you cease to pay:

  • Class 2 National Insurance by the time you attain State Pension age bracket (or about four months after this to settle any charge you owe)
  • Class 4 National Insurance from April 6 (beginning of the tax year) as soon as you attain the age of State Pension

Your National Insurance number

You possess a National Insurance number to ensure your tax and National Insurance payments are logged against your name.
It is composed of numbers and letters and on no account changes.

Your National Insurance number can be found on your;

  • Tax return
  • P60
  • Payslip

Apply for a National Insurance number should you not have one already, or have misplaced it.

Who makes use of your National Insurance Number?

 It is important for these organisations to know what your National Insurance number is:

  • Your boss
  • HM Revenue and Customs (HMRC)
  • Your local council, should you claim Housing benefit, or the Northern Ireland Housing Executive
  • The Department for Work and Pensions (including the Pension and Jobcentre Plus, Disability and Carers Service), should you claim state benefits, or in Northern Ireland the Dept for Social Development
  • Electoral Registration Officers (to verify your identity when you register to vote)
  • Your ISA provider, if you open an Individual Savings Account (ISA)
  • The Student Loan Company, should you apply for a student loan. To stave off character fraud, keep your National Insurance number protected. Never share with people who do not need it.

The amount you pay

The amount of National Insurance you pay is based on your employment status and the amount you earn.

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Should you be employed?

 You only pay Class 1 National Insurance contributions. You will pay less should:

  • You be in a contracted out workplace pension
  • You be a widow or a married woman with a valid ‘election certificate’
  • You be suspending National Insurance as you have got at least a job

Employers pay a different rate of National Insurance based on the category letters of their workers.

How to pay

 You can only pay National Insurance with your tax. It will be taken from your wages by your employer before you are paid. Your payslip will indicate your contributions. Should you be a director of a limited company, you may as well be your own worker and pay Class 1 National Insurance via your PAYE payroll.

Should you be self-employed

You only pay Class 4 and Class 2 National Insurance, based on your profits. Several individuals pay both via Self-Assessment. There exist special regulations for individuals with certain jobs (like examiners or individuals who operate businesses relating to property or land) who do not pay Class 2 National Insurance by means of Self-Assessment.

Should you be self-employed and employed

You may be a worker but at the same time perform self-employed work. In this instance, your employer will subtract your Class 1 National Insurance from your pay, and then you will have to pay Class 2 and 4 costs for your self-employed work.

The amount you pay is based on your collective incomes. HM Revenue and Customs (HMRC) will notify you of the amount of National Insurance that is due after you have filed your Self-Assessment tax returns.

Many contractors will use our company formation service to enable them to form a Limited company which in turn can be used to help reduce their tax overheads. The simplistic idea being that they can pay them self a dividend as a shareholder in the company which attracts less tax than a traditional salary.

Article by

Jody Smith

A content and media expert, I have worked for 7 years alongside start-ups and small businesses to effectively promote their brands through blogs, social media and content marketing strategies.

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