National Insurance Rates: Everything you need to Know
You’ll be paying Class 1 National Insurance contributions, if you have an employer. This also consists if you’re self-employed but work for an employer—your employer will pay you National Insurance through your payslips along with own employer contributions of 13.8%.
It’s useful to find out if you’re exempt from paying National Insurance. If you don’t require to pay National Insurance you might be entitled to National Insurance credits, or you can consider making voluntary contributions.
National Insurance Rates 2018-19
Whatever the amount of National Insurance you pay is equivalent to income tax.
The calculation of National Insurance is applicable on gross earnings (before tax or pension deductions) above on ‘earnings threshold’.
The deduction of Class 1 National Insurance contributions is made by your employer from your:
- bonuses or commission
- maternity, paternity and adoption pay
- sick pay
The National threshold in the year 2018-19 has gone up to £8,424 a year(rise from £8,164 in 2017-18). You don’t require to pay National Insurance contributions if your earnings fall below the earnings threshold.
You pay 12% of your earnings between £8,424 and £46,350, if you’re earning above the threshold(risen from £8,424 and £46,350).
Above anything you earn above £46,350 a year, you have to pay National Insurance at 2%.
|How much you earn||Class 1 rate|
|Less than £8,424||0%|
|£8,424 – £46,350||12%|
|More than £46,350||2%|
|How much you earn||Class 2 and 4 rates|
|Less than £6,205||0%|
|£6,205 to £8,424||£2.95 per week|
|£8,424 – £46,350||9% + £2.95 per week|
|More than £46,350||2% + £2.95 per week|
|Unemployed or exempt from NI|
|Type of contributions||Class 3 voluntary contributions|
|Amount||£14.65 per week|
Self-Employed National Insurance Rates
You could pay two types of National Insurance, if you’re self-employed.
For self-employed, you could pay Class 2 contributions, which are a flat rate of £2.95 a week for 2018-19 (and £2.85 per week for the preceeding year).
You can select of not paying Class 2 contributions on profits(earnings minus allowable expenses) below a specified limit, so you don’t need to pay National Insurance at all—that means threshold is £6,205 for 2018-19 and £6,025 for 2018-19.
You must pay Class 4 contributions if your profits are above £8,424 in 2018-19 along with Class 2 contributions.
Class 4 contributions are 9% of taxable profits in 2018-19 i.e. between £8,424 and £46,350. For profits above £46,350, Class 4 contributions are 2% of profits.
Voluntary Class 3 National Insurance Rates
If you have missed out any National Insurance contributions, you can fill in those gaps by paying Class 3 voluntary contributions.
Voluntary contributions can only be paid if:
- You’re not liable for or you are exempted from Class 1 or Class 2 contributions
- You are not working
- Your contributions for a particular year aren’t appropriate to count towards state pension entitlement (if you’re earning less than £157 a week), or
- You are living abroad
Class 3 NI for 2018-19 is £14.65 a week. This will be the maximum limit you can pay every week.
It is cheaper to pay Class 2 NI contributions voluntarily of £2.95 a week, if you’re exempted from Class 2 contributions on account of low profits and if you’re self-employed then it’s better to make Class 3 NICs. You will be able to do this until April 2018.
The same goes for years when you work abroad for a foreign employer but still wish to obtain the benefits that paying NI qualifies you to in the UK.
This is only applicable if you have previously lived in the UK for three years or before going abroad have paid three years’ worth of National Insurance.