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National Insurance

Once you are 16 or over and start earning above a certain amount, you will start paying National Insurance (NI) contributions (payments)

NI is important because when you have paid enough contributions, you will qualify for certain state benefits, including State Pension.

The following benefits are all dependent on how much NI you have contributed:

  • Contribution-based Jobseeker's Allowance
  • Contribution-based Employment and Support Allowance
  • Basic State Pension
  • Additional State Pension
  • Maternity Allowance
  • Widowed parents' allowance
  • Bereavement allowance
  • Bereavement payment

To be specific, you pay National Insurance if you’re 16 or over, an employee earning above £153 a week or self-employed and making a profit over £5,885 a year. There are some exceptions, as you’ll see.

Your employer will take NI and tax from your wages before you get paid. Your payslip will show your contributions.

What do I pay?

The level of NI you pay will depend on whether you are employed or self-employed and how much you earn.

If you’re employed, you pay Class 1 National Insurance contributions. The rates for most people are 12% of your weekly earnings between £153 and £805 and then 2% of any weekly earnings over £805.

If you’re self-employed and make over £5,886 profit, you pay Class 2 contributions. Currently, you pay Class 2 National Insurance contributions at a standard rate of £2.75 a week.

If you’re self-employed and make £7,956 profit or more, you pay Class 4 contributions. Currently, you pay 9% on annual profits between £7,956 and £41,865 and 2% on any profit over that.

To find out the latest NI rates, visit the HM Revenue and Customs website.

Your NI number/record

When you reach 16 years old, you will be sent an NI number, which is your own personal account number that records all your contributions.

You should only give your NI number to your employer, Jobcentre Plus, your local council or HM Revenue and Customs (Inland Revenue).

Your record is done in ‘qualifying years’. Any gaps in your NI record might mean you don’t have enough qualifying years to get State Pension and other benefits.

How many qualifying years do you need to get the full State Pension? If you reach State Pension age on or after 6 April 2016 age, it’s normally 35 for men or women.

How many qualifying years do you need to get Bereavement benefits? It’s currently 39 qualifying years for a woman and up to 44 for a man.

You can ask for your NI contributions record here or contact the NI Helpline on 0300 200 3500 (telephone) or 0300 200 3519 (mobile).

Gaps in your NI record

Gaps in your record might be because you’re ill, unemployed or looking after someone and claiming benefits.

In such cases, you might be able to get National Insurance Credits, which could count towards a ‘qualifying year’ and so could fill gaps in your record.

Sometimes, you will automatically get these Credits, but other times you will have to apply. To see when you might have to apply, click here.

There are 2 types of Credits you might be able to get:

  • Class 1 - these count towards your State Pension, bereavement benefits and some other benefits e.g. Jobseeker’s Allowance
  • Class 3 - these count towards your State Pension and bereavement benefits only

You might be able to get Class 1 Credits if you are looking for work (whether or not you’re on Jobseeker’s Allowance); ill, disabled or on sick pay; on maternity, paternity or adoption pay; on Carer’s allowance; or receiving Working Tax Credit with a disability premium.

There are some other, really specific situations that might qualify you for Class 1 Credits, too, and they can be seen here.

You might be able to get Class 3 Credits if you are a parent or foster carer; a carer on Income Support; a family member who cares for a child under 12; somebody receiving Working Tax Credit without a disability premium; or somebody getting the new Universal Credit.

Topping up your NI record: voluntary contributions

However, there are some cases when you might not get any Credits at all, for example, if you are employed or self-employed but are on a low income (currently at below £111 a week).

If this is the case for you, you might want to top up your NI, like your phone, with voluntary contributions (payments).

Some people feel that they do not need to pay or won’t benefit from voluntary contributions because they have enough years left ahead of them in their working life to make up the number of qualifying years needed to get the full State Pension.

However, others may pay voluntary contributions because they wish to qualify for bereavements benefits, which take 39 years for women or 44 years for men.

Some also pay voluntary contributions to increase the bereavement benefits their spouse or civil partner gets if they die.

Deadline: You usually have to make up the gaps in your NI record within six years of the end of the tax year that you’re topping up.

Remember: If you're thinking about paying voluntary National Insurance contributions, don't forget to check any free Credits you can apply for or might have already automatically received.

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