National Insurance: What am I paying for?

National Insurance: What am I paying for?
National Insurance (NI) in the United Kingdom is a system of contributions paid by workers and employers to qualify for certain benefits. The national insurance scheme is administered by HM Revenue and Customs (HMRC).
National insurance numbers
A national insurance number (NINO) is a number unique to you which is used to keep track of your national insurance contributions and the benefits which you are paid. The number is made up of two letters, six numbers and one letter, for example, AB 123456 C. You must not let anyone else use your number.
National Insurance Contributions classes and rates

NI Class

Who pays

How to pay

NI rate (2016-17 tax year)

Class 1

Employees pays than earning £155.01 to £827 a week (£672.01 to £3,853 a month)

Throught payroll

12%

Employer pays than employees earning £156.01 to £827 a week (£676.01 to £3,853 a month)

Throught payroll

13.8%

Class 2

Self-employed people earning more than ££5,965 a year

Throught Self Assessment

£2.80 a week

Class 3

Voluntary contributions

Write HMRC

£14.10 a week

Class 4

Self-employed people earning profit £8,060 to £43,000 a year

Throught Self Assessment

9%

 

What National Insurance is for

Benefits

Class 1: employees

Class 2: self-employed

Class 3: voluntary contribution

Basic State Pension

Yes

Yes

Yes

Additional State Pension

Yes

No

No

New State Pension

Yes

Yes

Yes

Contribution-based Jobseeker’s Allowance

Yes

No

No

Contribution-based Employment and Support Allowance

Yes

No

No

Matenity Allowance

Yes

Yes

No

Bereavement Benefits

Yes

Yes

Yes

 

Class 4 contributions paid by self-employed people with a profit over £8,060 don’t usually count towards state benefits.

 

You can find more information about Nationa Insurance on the GOV.UK

 

Follow us on Facebook to find more tips in business, accounting, tax and legal.

 

Also you can get our articles for free directly to your email inbox. Please sign up form below.

dhal-logo_round

mm

About Diana Hurta

Founder / CEO at DH Accounts & Legal Ltd.

Get Our Newsletters

Get our news, articles, offers, videos for free and find tips in business, accounting, tax and legal for your successful business!

Subscribe