National Insurance: Everything you need to know
Hy guys! If you’re living in the UK, you’ve probably heard of National Insurance (NI). It’s a mandatory contribution that workers, employers, and self-employed individuals pay to the government, and it goes towards funding the country’s public services, including healthcare, pensions, and unemployment benefits. In this article, we’ll take a closer look at what National Insurance is, who pays it, how much you’ll have to pay, and much more.
What is National Insurance?
Simply put, National Insurance is a system that funds a range of social security benefits in the UK. These benefits include State Pension, Jobseeker’s Allowance, Maternity Allowance, and more. National Insurance contributions are usually taken out of your pay before you receive it, so you won’t even notice the deduction.
There are different classes of National Insurance contributions, and the one you pay depends on your employment status and how much you earn. For example, if you’re employed, you’ll pay Class 1 National Insurance contributions, while self-employed individuals pay Class 2 and Class 4 contributions.
Who has to pay National Insurance?
Most workers in the UK have to pay National Insurance, including employees, self-employed individuals, and company directors. You’ll have to start paying National Insurance if you’re aged 16 or over and earn above a certain amount.
amount you have to earn before you start paying National Insurance contributions depends on your employment status and the class of National Insurance you’re paying. For example, if you’re employed and paying Class 1 National Insurance contributions, you’ll start paying when you earn over £183 per week.
However, there are some exceptions to who has to pay National Insurance. For instance, if you’re a student working part-time, you might not have to pay National Insurance. Additionally, if you’re over State Pension age, you might not have to pay National Insurance either. You can find out if you’re exempt from paying National Insurance by checking with the government.
How much National Insurance will I have to pay?
The amount of National Insurance you’ll have to pay depends on how much you earn and what class of National Insurance you’re paying. The rates for National Insurance contributions change every tax year, so it’s important to keep up to date with the latest rates.
For Class 1 National Insurance contributions, the rate for the 2022/23 tax year is 12% of your earnings between £9,568 and £50,270 per year. If you earn over £50,270 per year, you’ll pay an additional 2% on earnings above that amount.
For Class 2 National Insurance contributions, the rate for the 2022/23 tax year is £3.95 per week. If you earn below the Small Profits Threshold (currently £6,515 per year), you might not have to pay Class 2 contributions.