Find out who pays what portion of your National Insurance payment by looking at who pays what percentage of your earnings and how much you make.
What exactly do National Insurance classes entail?
National Insurance
Contributions to National Insurance are made by workers in a variety of different ways, depending on how they are employed and how much they earn. The term ‘classes’ refers to these many classifications.
The following table provides an explanation of the various National Insurance classes, including information about who is responsible for paying what amount in 2022-2023 and how payments are collected.
| Class | Who foots the bill? | How are they gathered together? |
|---|---|---|
| Class 1 | Employees who are under the age of state pension eligibility and earn more than £190 per week between April 6, 2022 and July 5, 2022, and more than £242 per week between July 6, 2022 and April 5, 2023, respectively | PAYE |
| Class 1 A or B | These contributions are made by employers toward employee benefits or expenses. | Paid over to the HMRC |
| Class 2 | People who are self-employed and whose annual profits total more than £11,908* | Paid for by the individual through self-assessment |
| Class 3 | Contributions made on a voluntary basis by individuals who have a contribution history that is incomplete for national insurance purposes | Form CF83 was used in the payment to HMRC. |
| Class 4 | People who are self-employed and have annual profits of more than £9,880 between the 6th of April 2022 and the 5th of July 2022 and more than £12,570 between the 6th of July 2022 and the 5th of April 2023. | Paid for by the individual through self-assessment |
*Annualised figure made up of 13 weeks of £9,880 and 39 weeks of £12,570 threshold.
In April 2022, contributions for classes 1 and 4 were raised by 1.25 percentage points to assist in meeting the rising costs of health and social care.
Workers who have already reached the age at which they are eligible for a state pension will be required to start paying the levy beginning in 2023. Currently, workers in this age bracket are exempt from paying any National Insurance Contributions.
Payroll deductions for national insurance from employees
Payroll deductions
Class 1 contributions, which are collected through PAYE along with an individual’s income tax, are made by employees as well as the majority of workers employed by agencies.
Between the 6th of April and the 5th of July, 2022-23, your marginal tax rate will be 13.25% on earnings between £9,880 and £50,270. Beginning on the 6th of July, however, your minimum taxable income will be raised to £12,570. A further 3.25 percentage will be deducted from profits in excess of £50,270.
Earnings between £9,568 and £50,270 were subject to a tax rate of 12 percent in 2021-22, while earnings over this threshold were subject to a rate of 2 percent.
However, because national insurance is computed on a monthly basis (assuming you are paid on a monthly basis), you may wind up having to pay a higher total amount for income that is irregular, such as bonuses.
In addition to this, businesses are required to make contributions on the income of their employees, which will normally amount to 15.05 percent beginning in April 2022 of wages that are greater than £758 per month.
Learn more about:
Rates for national insurance; for a comprehensive analysis of national insurance rates and thresholds, click here.
Contributions to National Insurance from those who are self-employed
When you’re self-employed, you’ll often be responsible for making contributions to both Class 2 and Class 4 of the National Insurance system.
If you earn more than £11,908 in 2022-23, you will have to pay Class 2 contributions at a rate of £3.15 per week. These contributions are required. However, if your annual income is greater than £6,725, you will still be eligible to accumulate National Insurance credits even though you will not be required to make Class 2 contributions.
Contributions to Class 4 will be due on profits over £9,880 at a rate of 10.25 percent between the 6th of April and the 5th of July; from the 6th of July, the threshold will be raised to £12,570. Above £50,270 in earnings, you’ll be subject to a 3.25 percent tax.
If you earned more than £6,515, you were required to make Class 2 contributions in 2021-22, which cost £3.05 per week.
Class 4 payments were payable at a rate of 9 percent on profits that were greater than £9568, and this rate dropped to 2 percent on earnings that were greater than £50270.
Find out more about the Voluntary Class 3 Contributions for National Insurance for Self-Employed Individuals.
Contributions to Class 3 of the National Insurance system are ones that are made on a voluntary basis. If your history from prior years has some holes in it, you could choose to fill them in by doing this.
The weekly price of these items will increase to £15.85 in 2022-23, up from £15.40 in 2021-22.
Student responsibilities regarding National Insurance
Once you turn 16, you are required to start making payments toward your National Insurance. Students who are older than this do not qualify for an exemption. If they make enough, they pay their taxes just like any other worker.
Students are not awarded NICs for the years that they are enrolled in school if they do not have any paid work experience during that time.
This results in a “gap” in their contributions record; yet, the majority of them will continue to work for sufficient years after they qualify to earn a full pension from the state.
Individuals with a Low Income and National Insurance
When your annual salary falls below a specific threshold, the National Insurance tax is waived completely.
For employed workers, this is £9,880 for the period between 6 April and 5 July 2022 and rises to £12,570 for the period between 6 July 2022 and 5 April 2023 in 2022-23; in 2021-22, it was £9,568.
In spite of this, you should give considerable thought to making voluntary payments to Class 3, as significant gaps in your record may prevent you from receiving some benefits.
Learn more about:
When it comes to national insurance and benefits, which advantages are associated with certain kinds of contributions?
Insurance credits from the national government
If you don’t pay National Insurance, there may be holes in your record of contributions; nevertheless, in the majority of cases, HMRC will ‘credit’ you with contributions anyway.
Credits for national insurance can make it easier for you to qualify for certain contributing benefits, such as the basic state pension and payments in the event that you are unable to work due to illness or unemployment.
To learn more, see our comprehensive guide to National Insurance credits, which includes a complete explanation of who is eligible to get them.
During retirement, national insurance payments
insurance payments
Even if you continue to work after you reach the age of eligibility for a state pension, which is presently 66, you will no longer be required to pay national insurance premiums.
This will no longer be the case as of April 2023 as a result of a new health and social care charge of 1.25 percentage points, which will begin to be implemented for workers who are under the age of state pension eligibility in April 2022.
When you reach this age, there may be options available to you to increase the amount of your state pension, even if you haven’t contributed enough over the course of 35 years to earn the maximum amount.
