Jane Dotson
National Insurance (NI) is a social security payment made by employers, employees and the self-employed in the UK. The amount of NI paid depends on one's employment status and income. While the main rates of NI have not increased, the thresholds at which people start paying or move to higher rates have not increased in line with inflation, resulting in many people paying more tax overall. Employers are also facing increased costs due to a hike in NI, which could impact hiring and wages. This article will explore the current and future rates of NI in the UK and how they affect individuals and businesses.
| Characteristics | Values |
|---|---|
| Who pays National Insurance? | Employers, employees, and the self-employed |
| When do workers start paying National Insurance? | When they turn 16 and earn more than £242 a week |
| When do self-employed workers start paying National Insurance? | When they have self-employed profits of more than £12,570 a year |
| What is the current rate of National Insurance for employees? | 8% on income of £12,570 to £50,270 a year |
| What is the National Insurance rate for employees earning over £50,270? | 2% |
| What is the National Insurance rate for self-employed workers? | 6% on earnings between £12,570 and £50,270, and 2% on profits above £50,270 |
| What is the current rate of National Insurance for employers? | 13.8% on employees' earnings above £9,100 a year |
| What will the rate of National Insurance for employers be from 6 April 2025? | 15% on salaries above £5,000 |
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What You'll Learn
How much National Insurance you pay
The amount of National Insurance (NI) you pay in the UK depends on your employment status and how much you earn. National Insurance is paid by employees, employers, and the self-employed.
If you have an employer, you pay Class 1 National Insurance. This is calculated each time you get paid, so the amount may vary if your pay changes. Your National Insurance contributions will stop when you reach State Pension age. As an employee, you’re normally paid through a Pay As You Earn (PAYE) system, so your contributions are automatically paid from your salary.
If you are self-employed, you pay Class 2 and/or Class 4 National Insurance, depending on your trading profits. You don't have to pay Class 2 contributions if your profits are above £12,570.
For the 2024/25 tax year, employees paid Class 1 NICs at 8% on earnings between £12,571 and £50,270. The rate is 2% on any earnings above £50,270. For the self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 are 6%, and 2% on profits above £50,270.
The amount of National Insurance paid by employers rose on 6 April 2025. The rate of employer NICs increased from 13.8% to 15%, and the threshold at which employers start paying NICs fell from £9,100 to £5,000 per year.
Overall taxation in the UK is high compared to historical rates. The OBR predicts that tax as a share of GDP will continue to rise and hit a record high in 2027-2028.
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National Insurance rates for employers
National Insurance (NI) is a UK tax paid by employees, employers, and the self-employed. The amount of National Insurance paid by employers depends on their employees' category letters. Employers must also pay Class 1A on some lump-sum payments, such as redundancy payments.
Currently, businesses pay a rate of 13.8% on employees' earnings above £9,100 a year. However, starting from 6 April 2025, employers will have to pay a higher rate of 15% on salaries above £5,000. This change will result in many people paying more tax overall, as the thresholds for paying or moving to higher rates have not increased in line with inflation.
For the self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 were reduced from 9% to 6% in 2024. This change was estimated to be worth around £350 to a self-employed individual earning £28,200. Additionally, self-employed workers are no longer required to pay Class 2 contributions, which were previously an additional category of NI.
The amount of National Insurance paid by employers can vary based on the number of weeks in a month. For instance, the rates for the previous tax years of 2023-2024 and 2022-2023 differ from the current rate for 2024-2025. Employers can refer to the HMRC guidelines for detailed information on contribution rates and their specific circumstances.
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National Insurance credits
National Insurance (NI) is a tax paid by employees, employers, and the self-employed across the UK. The amount of National Insurance paid depends on one's employment status and income. The National Insurance number, which is provided to those who pay this tax, is used to track contributions and determine eligibility for certain benefits.
Now, let's focus on National Insurance credits. These credits are available to individuals who are not paying National Insurance, such as those claiming benefits due to unemployment or illness. The credits help fill gaps in one's National Insurance record, ensuring eligibility for certain benefits, including the State Pension. There are two main types of credits: Class 1 and Class 3. Class 1 credits count towards the State Pension and may help qualify for additional benefits like New Style Jobseeker's Allowance. Class 3 credits are solely for the State Pension.
Eligibility for National Insurance credits depends on various factors. For instance, those on Universal Credit or Carer's Allowance may be eligible. Individuals aged over 18 and engaged in full-time government-approved training may also receive credits, provided the training duration does not exceed a year. Additionally, if you are caring for someone or unable to work due to illness, disability, or maternity, you may be eligible for credits that contribute to your State Pension.
To check eligibility and apply for National Insurance credits, individuals can contact HMRC and provide their National Insurance number, along with information on when the credits are for and why they are eligible. It is important to note that individuals receiving certain benefits, such as Jobseeker's Allowance or Universal Credit, may automatically receive credits without taking any additional action.
In conclusion, National Insurance credits are a vital aspect of the UK's National Insurance system, ensuring that individuals who are not in employment or are unable to work can still build up their State Pension entitlement and access other benefits. By providing different types of credits and considering various eligibility criteria, the system aims to support individuals in maintaining their financial security and well-being during periods of unemployment or incapacity.
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National Insurance when self-employed
National Insurance (NI) is a contribution paid by employees, employers, and the self-employed across the UK. The amount of National Insurance you pay depends on your employment status and income. Self-employed individuals have their own system of paying and levels of contributions, which are calculated differently from those employed by a company.
For the self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 fell from 9% to 6% in 2024. This change was estimated to be worth £350 to a self-employed person earning £28,200. Self-employed workers also no longer have to pay Class 2 NI contributions, a separate category of NI. The NI rate on income and profits above £50,270 remains at 2% for all workers.
Class 3 NI contributions, also known as Voluntary Contributions, allow self-employed people who earn less than the profit threshold of £6,725 to voluntarily contribute and maintain their record. Married women and widows who opted into the Reduced Rate Scheme before April 1977 are exempt from paying Class 2 NI contributions but must still pay Class 4 contributions.
If you are self-employed, you will pay your NI contributions through your self-assessment tax return annually. Your NI contributions will be paid alongside your income tax.
It is important to note that the rates and policies surrounding National Insurance contributions are subject to change over time. The information provided here may not reflect the most recent updates, and it is advisable to refer to the official government websites for the latest information on National Insurance rates and policies for the self-employed.
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National Insurance rate changes
National Insurance (NI) is a social security payment in the United Kingdom. The amount of NI paid depends on one's employment status and income. The NI rate for most employees is 8% on income between £12,570 and £50,270 per year. The NICs rate is 2% for any income over £50,270 per year.
The Chancellor of the Exchequer announced changes to NICs in the Autumn 2024 Budget. Between 6 January and 5 April 2024, the rate was 10%; prior to this, it was 12%. The rate for the self-employed fell from 9% to 6% for Class 4 NI contributions on all earnings between £12,570 and £50,270. The NICs rate on income and profits above £50,270 remains at 2% for all workers.
From 6 April 2025, the rate of employer NICs increased from 13.8% to 15%. The secondary threshold, or the amount at which employers start paying NICs, was also reduced from £9,100 to £5,000 per year from 6 April 2025 until 6 April 2028. The employment allowance has increased from £5,000 to £10,500 per year, allowing organizations to claim back National Insurance up to the allowance limit.
Overall, the UK's taxation rate is high compared to historical rates. Tax as a share of GDP is expected to reach a record high in 2027-2028, with the government collecting 37.7p of every pound generated in the economy.
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Frequently asked questions
The National Insurance rate in the UK depends on your employment status and income. For the 2024/25 tax year, employees paid Class 1 NICs at 8% on earnings between £12,571 and £50,270. The NICs rate is 2% on any earnings above £50,270.
Self-employed workers pay Class 2 and/or Class 4 National Insurance, depending on their trading profits. For Class 4 NICs, you pay 6% on earnings between £12,570 and £50,270, and 2% on profits above £50,270.
Employers pay Class 1 NICs at 13.8% on their employees' earnings above £9,100. From 6 April 2025, this rate increased to 15%, and the threshold decreased to £5,000.
Yes, National Insurance rates can change over time. For example, the starting rate for employees fell twice in 2024: from 12% to 10%, and then to 8%.
The amount of National Insurance you pay is based on your employment status and income. You can use online calculators to estimate your annual income and National Insurance contributions.
