National Insurance charges change based on whether you’re an employee or work for yourself. Here, we run over how much you’ll pay, depending on your job situation.
Do I pay National Insurance?
insurance
National Insurance has to be paid by both hired and self-employed people.
Your National Insurance contributions depend on your job status and how much you earn. Not everybody needs to pay National Insurance, but contributions count towards your state pension and other benefits.
If you have an employer, you’ll pay Class 1 National Insurance contributions. This also includes anyone who’s self-employed but work for an employer – it’s your company’s obligation to pay your National Insurance through your payslips, as well as their own employer contributions of 15.05 percent .
In September 2021, the government announced plans to establish a health and social care fee of 1.25 percentage points to be applied to UK workers’ National Insurance contributions from April 2022. In March 2022, further plans were published to increase the threshold at which you start paying Class 1 and 4 National Insurance to £12,570 from 6 July 2022 – and adjustments to when you pay Class 2 payments if you’re self-employed were also revealed.
It’s worth figuring out if you’re exempt from paying National Insurance. If you don’t have to pay National Insurance you might be eligible for National Insurance credits, or you might choose to make voluntary contributions.
National Insurance rates 2022-23
The amount of National Insurance you pay is worked out in a similar way to income tax.
National Insurance is calculated on gross earnings (before tax or pension deductions) or profits (earnings minus permitted expenses) above a threshold.
Whether you are an employee or self-employed determines what rate you are subject to pay.
National Insurance prices if you’re employed
Your contributions to National Insurance Class 1 will be deducted from the following by your employer:
compensation consisting of a salary, commission, bonuses, overtime, sick pay, maternity pay, paternity pay, and adoption money.
Class 1 rates have increased by 1.25 percentage points for the upcoming fiscal year, and beginning on July 6, the threshold at which you begin paying those rates will be adjusted.
This means that employees who are subject to Class 1 contributions will be required to pay 13.25 percent of their income (an increase from 12 percent in 2021-22) and 3.25 percent of their income (an increase from 2 percent), but the threshold at which they will be subject to the higher rates will change halfway through 2022-23.
The threshold for paying Class 1 National Insurance is raised to £9,880 per year between 6 April and 5 July 2022. If your annual income is less than this, you won’t have to make any contributions to the National Insurance system. 13.25 percent of your earnings above £9,880 and up to £50,270 will be deducted from any further income you bring in. You will be subject to a tax rate of 3.25 percent on any earnings that are greater than £50,270.
Because of the increase in the National Insurance threshold that will take effect on July 6th, the Class 1 rates won’t apply to wages until they surpass £12,570. This means that you will be able to keep more of your money before having to start paying NI.
Different rates of national insurance apply to people who are self-employed as opposed to those who are employed by another company. In this section, we will go over the many payment options available to you, along with the associated costs.
Should I get a National Insurance Number?
Insurance Number
Workers who are either employed or self-employed are obligated to make contributions to the National Insurance Fund.
Your contributions to National Insurance are calculated based on how much you earn as well as your work status. Although National Insurance payments are voluntary, they do contribute toward your eligibility for a state pension and other benefits if you choose to make them.
Contributions to Class 1 National Insurance will be required of you if you are employed by a company. This applies to everyone who is self-employed but works for an employer. If you are an employee, it is the responsibility of your employer to pay your National Insurance through your payslips, in addition to their own employer contributions of 15.05 percent.
Following the announcement of these proposals by the government in September 2021, the health and social care tax of 1.25 percentage points will be introduced to the National Insurance contributions made by workers in the United Kingdom beginning in April 2022. Additional plans to increase the threshold at which you start paying Class 1 and 4 National Insurance to £12,570 from 6 July 2022 were announced in March 2022, and changes to when self-employed individuals pay Class 2 contributions were also disclosed at that time. The new threshold will take effect on 6 July 2022.
It is in your best interest to determine whether or not you are exempt from paying National Insurance. In the event that you are exempt from paying National Insurance, you may be qualified to receive National Insurance credits; alternatively, you have the option to make voluntary payments.
Rates for national insurance in 2022 and 2023
The amount of National Insurance you are responsible for paying is determined in a manner analogous to that of income tax.
The amount of national insurance that must be paid is determined by gross earnings (prior to any deductions for taxes or pensions) or profits (earnings minus permitted expenses) that exceed a certain threshold.
Whether you are an employee or self-employed determines what rate you are subject to pay.
if you are employed, you will be subject to national insurance charges.
Your contributions to National Insurance Class 1 will be deducted from the following by your employer:
compensation consisting of a salary, commission, bonuses, overtime, sick pay, maternity pay, paternity pay, and adoption money.
Class 1 rates have increased by 1.25 percentage points for the upcoming fiscal year, and beginning on July 6, the threshold at which you begin paying those rates will be adjusted.
This means that employees who are subject to Class 1 contributions will be required to pay 13.25 percent of their income (an increase from 12 percent in 2021-22) and 3.25 percent of their income (an increase from 2 percent), but the threshold at which they will be subject to the higher rates will change halfway through 2022-23.
The threshold for paying Class 1 National Insurance is raised to £9,880 per year between 6 April and 5 July 2022. If your annual income is less than this, you won’t have to make any contributions to the National Insurance system. 13.25 percent of your earnings above £9,880 and up to £50,270 will be deducted from any further income you bring in. You will be subject to a tax rate of 3.25 percent on any earnings that are greater than £50,270.
Because of the increase in the National Insurance threshold that will take effect on July 6th, the Class 1 rates won’t apply to wages until they surpass £12,570. This means that you will be able to keep more of your money before having to start paying NI.
| Employed | |||
|---|---|---|---|
| How much money you make. | A rate of class 1 (6 April – 5 July) | How much money you make. | A rate of class 1 (6 April – 5 July) |
| Less than £9,880 | 0% | Less than £12,570 | 0% |
| £9,880-£50,270 | 13.25% | £12,570-£50,270 | 13.25% |
| More than £50,270 | 3.25% | More than £50,270 | 3.25% |
rates of self-employment National Insurance for those who are self-employed
If you are self-employed, you can be required to pay National Insurance at both the Class 2 and the Class 4 levels.
The Class 4 incarceration rate is now 10.25 percent, up from 9 percent in 2021-22, while the Class 5 rate is 3.25 percent, an increase of 1.25 percentage points (up from 2 percent in 2021-22).
In 2022-23, the weekly flat rate for Class 2 rates will be £3.15, which is an increase from the cost of £3.05 in 2021-22.
The barrier at which you pay Class 4 rates will effectively be £9,880 a year (£190 weekly) between the 6th of April and the 5th of July. After that date, it will increase to £12,570 a year (£242 weekly). This restriction is referred to as the “lower profits limit” or LPL.
Those individuals whose income falls between the “small profits threshold,” often known as the SPT (which is currently set at £6,725) and the LPL will no longer be required to make Class 2 contributions beginning on April 6, 2022.
To make sure that the benefits received by self-employed people are comparable to those received by employees in 2022-23, the government has stated that the LPL will be established at an annualised threshold of £11,908 (which is equivalent to 13 weeks at the threshold of £9,880 and 39 weeks at £12,570).
In spite of the fact that Class 2 contributions are going to be eliminated, individuals who have profits that fall between the Small Profits Threshold (SPT) of £6,725 and the Large Profits Threshold (LPL) of £11,908 will still be able to accumulate National Insurance credits and be eligible for contributory benefits.
You will not be required to pay Class 2 contributions on profits that are lower than the SPT, but you have the option to do so voluntarily.
Using the personal tax factsheet, you can acquire additional knowledge.
If you are currently self-employed and would want a rough idea of how the changes described above may affect your tax bill, you can use the tax calculator that can be found below.
Learn more about it here:
taxation of those who are self-employed This detailed tutorial will walk you through the various taxes that you might be required to pay.
Calculate your total cost, receive money-saving advice that is jargon-free, and file your return directly to the HMRC.
National Insurance calculator 2022-23
Utilize our National Insurance Calculator in order to get the total amount that you will be responsible for paying this year.
You may also view what you might owe for previous years based on your income; all you have to do is select the tax year you want to see from the dropdown menu. This feature is available for free on the IRS website.
The amounts that are displayed represent what you would owe on an annual basis, and it is assumed that you worked during the entire tax year.
In order to estimate your tax burden, the calculator uses some very conventional assumptions about persons who are employed and people who are self-employed. It is important to keep in mind that the amount of money you will bring home is contingent not only on the contributions you make to your pension and the repayments you make on your student loans, but can also vary based on the tax code you use.
Check what you will spend between the 6th of April and the 5th of July, as well as what you will pay between the 6th of July and the 5th of April, and then add those two numbers together to get your total bill for the 2022-23 academic year.
Rates for National Insurance Class 3 that are paid voluntarily
You can make up for any gaps in your National Insurance contributions by making what are referred to as “voluntary” donations to your Class 3 account.
Contributions are only considered voluntary in the following circumstances:
if you do not work, if you are not liable for, or exempt from, Class 1 or Class 2 contributions, if your contributions for a certain year aren’t enough to count towards state pension entitlement, or if you live outside the United Kingdom, you may not be eligible for a state pension.
In 2022-23, the Class 3 contributions are £15.85 per week, which is an increase from the previous year’s rate of £15.40 per week in 2021-22.
Learn more about the option of making voluntary contributions to the National Insurance.
The so-called “stamp of the married woman”
married woman
Up until the year 1977, women who were married had the option of making National Insurance contributions at a lower rate. They ceased contributing to their own state pension in order to rely on the record of their husband’s National Insurance contributions rather than continuing to build up their own entitlement to a state pension.
It was commonly referred to as the “married woman’s stamp.”
Women who chose this option have the choice to either continue making reduced contributions to National Insurance or pay the full rate in order to build up individual pension entitlement. Their maximum entitlement, which has been decreased as a result of lower contributions, is currently sixty percent of the basic state pension.
Since 2016, women working in this position who have not yet reached the age for receiving a state pension are ineligible for the benefit. Instead, their access to a pension will be determined by the number of qualifying years’ worth of National Insurance contributions they have made on their own in their own right. Ten years of service are required as a bare minimum to qualify for any state pension.
