Understanding National Insurance Contributions in the UK

Published on October 03, 2023

National InsuranceNIC Rates

Dividends Tax In the UK, National Insurance (NI) contributions are crucial for funding important services, such as healthcare and pensions. These contributions are split between employees and employers. Let's break down how these contributions work.

Who Pays National Insurance?

You pay mandatory National Insurance if you're 16 or older and fall into one of the following categories:

  1. Employees: If you earn more than £242 per week from one job.
  2. Self-Employed: If you make a profit of more than £12,570 a year.

Special Cases:

  • You don't pay National Insurance but still qualify for certain benefits and the State Pension if you earn between £123 and £242 a week as an employee or have profits between £6,725 and £12,570 a year if you're self-employed. Your contributions are treated as if you've paid to protect your National Insurance record.

Your National Insurance Number

Your National Insurance number is unique to you and never changes. It's a combination of letters and numbers, and you can find it in various places:

  • On your payslip
  • On your P60
  • In letters about your tax, pension, or benefits
  • In the HMRC app
  • In the National Insurance section of your personal tax account
  • In your Apple or Google Wallet if you saved it there from your personal tax account

Employee National Insurance Rates

As an employee, you pay Class 1 National Insurance contributions. For the tax year 2023 to 2024, the rates are as follows:

Your PayClass 1 National Insurance Rate
£242 to £967 a week (£1,048 to £4,189 a month)12%
Over £967 a week (£4,189 a month)2%

Special Cases:

  • You'll pay less if you're a married woman or widow with a valid 'certificate of election.'
  • If you're deferring National Insurance because you have more than one job.

Employee National Insurance Rates

The table below outlines the NI rates for employees, applicable from 6 April 2023 to 5 April 2024.

Category£123 to £242 (£533 to £1,048 a month)£242.01 to £967 (£1,048.01 to £4,189 a month)Over £967 a week (£4,189 a month)
A0%12%2%
B0%5.85%2%
CN/A (Not Applicable)N/A (Not Applicable)N/A (Not Applicable)
F0%12%2%
H0%12%2%
I0%5.85%2%
J0%2%2%
L0%2%2%
M0%12%2%
SN/A (Not Applicable)N/A (Not Applicable)N/A (Not Applicable)
V0%12%2%
Z0%2%2%

To calculate your Income tax, you can use the following tool Take Home Pay Calculator .

To compare differences between two salaries, you can use the following tool Compare two salaries .

To calculate your marginal rate tax , you can use the following tool Marginal tax rates.

Employer National Insurance Rates

For employers, the following table indicates the NI rates from 6 April 2023 to 5 April 2024.

Category£123 to £175 (£533 to £758 a month)£175.01 to £481 (£758.01 to £2,083 a month)£481.01 to £967 (£2,083.01 to £4,189 a month)Over £967 a week (£4,189 a month)
A0%13.8%13.8%13.8%
B0%13.8%13.8%13.8%
C0%13.8%13.8%13.8%
F0%0%13.8%13.8%
H0%0%0%13.8%
I0%0%13.8%13.8%
J0%13.8%13.8%13.8%
L0%0%13.8%13.8%
M0%0%0%13.8%
S0%0%13.8%13.8%
V0%0%0%13.8%
Z0%0%0%13.8%

National Insurance contributions play a vital role in supporting various benefits and services. Understanding these rates is essential for both employees and employers to ensure compliance with HMRC regulations.