National Insurance: The Basics

National Insurance is a system of contributions paid by workers in the UK to qualify for certain state benefits and the State Pension. Whether you pay it, which type you pay, and how much depends on your employment status and earnings. Understanding the basics will help you know what to expect on your payslip or Self Assessment return.

What National Insurance pays for

When you pay National Insurance contributions, you're building up your entitlement to certain state benefits and the State Pension. Your contributions create a National Insurance record that HMRC uses to determine what you can claim.

To make sure your contributions are recorded correctly against your name only, you need a National Insurance number. This is a unique identifier made up of 2 letters, 6 numbers and a final letter (for example, QQ123456B). You'll usually receive your National Insurance number shortly before your 16th birthday. If you need to find it later, it appears on documents like your payslip or P60.

Who pays National Insurance

You must pay National Insurance if you're aged 16 or over and either:

• An employee earning more than £242 per week from one job
• Self-employed and making a profit of more than £12,570 a year

However, even if you earn below these thresholds, you may still build up your National Insurance record without actually paying. This happens if you're:

• An employee earning between £129 and £242 per week from one job
• Self-employed with profits of £7,105 or more a year

In these situations, your contributions are treated as having been paid to protect your National Insurance record, meaning you don't have to pay anything but still qualify for certain benefits and the State Pension.

If you earn less than these lower thresholds, you can choose to pay voluntary contributions to avoid gaps in your National Insurance record.

National Insurance classes explained

National Insurance comes in different types, known as 'classes'. The class you pay depends on your employment status and how much you earn.

Class 1 is paid by employees and deducted automatically from your wages by your employer. Employers also pay Class 1, Class 1A and Class 1B contributions on behalf of their employees (Class 1A and 1B are only paid by employers on employees' expenses or benefits).

Class 2 applies to self-employed people. If your profits are £7,105 or more a year, Class 2 contributions are treated as having been paid automatically to protect your National Insurance record. You don't actually pay Class 2 contributions.

Class 3 is a voluntary contribution you can choose to pay if you're not working or earning below the lower thresholds, to fill gaps in your National Insurance record.

Class 4 is paid by self-employed people on profits above £12,570 a year.

How much you pay as an employee

If you're employed, you pay Class 1 National Insurance. Your employer deducts it from your pay before you receive it, and it will appear on your payslip.

For the 2026 to 2027 tax year, the Class 1 rates are:

• 8% on earnings between £242 and £967 per week (£1,048 to £4,189 per month)
• 2% on earnings over £967 per week (£4,189 per month)

If you earn between £129 and £242 per week, you don't pay National Insurance but your record is still protected.

If you're a director of a limited company, you may be your own employee and pay Class 1 National Insurance through your PAYE payroll.

How much you pay when self-employed

If you're self-employed, you pay Class 4 National Insurance on your profits, usually through Self Assessment.

If your profits are £7,105 or more: Your Class 2 contributions are treated as having been paid to protect your National Insurance record. You don't have to pay Class 2 contributions.

If your profits are more than £12,570 a year: You must pay Class 4 contributions through Self Assessment.

If your profits are less than £7,105 a year: You don't have to pay anything, but you can choose to pay voluntary Class 2 contributions to avoid gaps in your National Insurance record.

Some self-employed people with specific jobs (such as examiners or business owners in property or land) may not pay Class 2 National Insurance through Self Assessment and may need to consider voluntary contributions.

When you stop paying

You stop paying National Insurance when you reach State Pension age.

If you're employed, you stop paying Class 1 National Insurance when you reach State Pension age.

If you're self-employed, you stop paying Class 4 National Insurance from 6 April (the start of the tax year) after you reach State Pension age.

Voluntary contributions

If you have gaps in your National Insurance record—perhaps because you weren't working, or your earnings were too low—you can choose to pay voluntary contributions. This ensures you maintain a complete record for State Pension and benefit purposes.

You can pay voluntary Class 3 contributions if you're not working or earning below the thresholds. Self-employed people with very low profits can pay voluntary Class 2 contributions.

Sources

• National Insurance: introduction

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.