What is National Insurance?

Updated on 10 June 2022

Tax basics

National Insurance contributions (NIC) help to pay for some state benefits, including retirement pensions. NIC can also earn you the right to receive certain benefits. We explain how NIC works and how to work out what you will pay. If you want information on how to get a National Insurance number (NINO) or what to do if you have lost or forgotten your NINO, visit our National Insurance number page.

Man and woman next to a clipboard with a National Insurance document

Do I have to pay National Insurance contributions?

You pay NIC if you are:

  • either employed or self-employed; and
  • aged 16 or over but below state pension age.

The amount of NIC you pay depends on how much you earn.

For the 2022/23 tax year, certain rates of National Insurance have increased temporarily by 1.25 percentage points. From 6 April 2023, the rates will revert to their normal levels and a new Health and Social Care Levy will be introduced. The levy is payable on earnings which are subject to NIC, or which would be subject to NIC if you were below state pension age. This means that those over state pension age will be liable to the levy if they have earnings from employment or self-employment.

The way in which you work will affect the type of NIC you pay. Employees and other workers (for example, people working for agencies) pay different types of NIC to the self-employed (that is, those who work for themselves).

You stop paying NIC when you reach state pension age, even if you continue to work. The exception is Class 4 NIC for the self-employed, which you pay for the whole tax year in which you reach state pension age.

You pay NIC on earnings (income from work), that is, employment income and profits from self-employment. You do not pay NIC on pension income.

You can find out when you will reach state pension age by using the calculator on GOV.UK.

I am a student. Do I have to pay National Insurance contributions?

There are no special rules for students, including international students. You will pay National Insurance contributions on the same basis as other workers in the UK.

If you need to get a National Insurance number or you have mislaid yours, you can get advice on our page How do I get a National Insurance number?. Sometimes migrants or international students may find that a National Insurance number is included on the reverse of their biometric residence permit.

What are National Insurance credits?

In certain circumstances, you may be given National Insurance credits, even though you are not working. These count towards some, but not all entitlements. The main benefit they count towards is the state pension.

You must be aged 16 or over and below state pension age for the year in which you may be credited.

There are many different circumstances in which you might be eligible to receive National Insurance credits, including being unable to work due to illness, or caring for someone.

There are two types of National Insurance credits: Class 1 credits and Class 3 credits. The type of credits you might get depends on your individual circumstances. You have to meet certain conditions to receive National Insurance credits.

In some circumstances, you should be given National Insurance credits automatically, for example, if you get employment and support allowance or carer’s allowance. In other circumstances, you have to make a claim.

From 6 April 2022, if you are self-employed then in certain circumstances you can be treated as having made Class 2 contributions if you do not earn enough to be required to pay them. These are different from National Insurance ‘credits’. You may need to complete a Self Assessment tax return in order to demonstrate entitlement to these deemed contributions.

There is more information on the different situations in which you might be able to get National Insurance credits and how to get National Insurance credits on GOV.UK.

A further page gives information on Specified Adult Childcare credits (sometimes thought of as babysitting or grandparents’ credits).

What benefits do my contributions pay for?

To qualify for some UK state benefits, you need to have paid or been credited with a certain amount or type of NIC. These state benefits are called contributory benefits, because they depend on your NIC contributions. In some cases, National Insurance credits will count towards these contributory benefits, but in other cases they will not. You should check carefully the eligibility requirements on GOV.UK. Many benefits depend on sufficient NIC being paid (or credited) to create a qualifying year.

There are other benefits for which, provided the rules for claiming apply to you, it does not matter whether or not you have paid any or enough NIC.

Benefits which do not depend on NIC include:

  • attendance allowance and disability living allowance
  • personal independence payment
  • child benefit
  • guardian's allowance
  • income-related employment and support allowance
  • income-based jobseeker's allowance
  • industrial injuries benefits
  • carer's allowance
  • severe disablement allowance
  • statutory payments, for example, statutory sick pay
  • working tax credit and child tax credit
  • war widow's or widower's pension
  • pension credit
  • universal credit

Use the following table to see which type of contribution counts towards which benefit:

Benefit

Class 1

Class 2

Class 3

Maternity allowance

Yes

Yes

No

Contribution-based jobseeker's allowance

Yes

No

No

Contribution-based employment and support allowance

Yes

Yes

No

Widowed parent's allowance
(only available where spouse or civil partner died before 6 April 2017)

Yes

Yes

Yes

Basic state pension

Yes

Yes

Yes

New flat-rate state pension

Yes

Yes

Yes

Bereavement benefits (except bereavement support payment)

Yes

Yes

Yes

Bereavement support payment

Yes

Yes

No


Note that there are exceptions to the above for share fishermen and volunteer development workers employed abroad.

Class 4 National Insurance contributions do not count towards any state benefits.

What are Class 1 National Insurance contributions?

You pay Class 1 NIC if you work for an employer, that is, you are an employee. Your employer takes the NIC off your wages before paying you. Your employer also has to pay NIC on your earnings, but you need not worry about these.

There is detailed information about Class 1 NIC in the employment section.

What are Class 2 National Insurance contributions?

You pay Class 2 NIC if you are self-employed and your profits exceed a certain level. Class 2 NIC can count towards entitlement to certain contributory state benefits – as explained above.

On 23 March 2022, the government announced that the profits threshold for paying Class 2 NIC would be increased so that it is aligned with the profits threshold for paying Class 4 NIC. The 2022/23 tax year is a transitional year, and from 6 April 2023 both thresholds will be aligned with the personal allowance for income tax. Those who would no longer be liable to pay Class 2 NIC as a result of the announcement will be treated as having made Class 2 contributions without having to pay them.

Detailed information on Class 2 NIC can be found in our self-employment section.

Class 2 NIC can also be paid by those who are employed (or self-employed) overseas in certain circumstances. For more information, please see our migrants section.

What are Class 3 National Insurance contributions?

If you do not pay either Class 1 NIC or Class 2 NIC and you do not receive National Insurance credits, but you want to protect your rights to some state benefits, you can pay Class 3 NIC. These are also known as voluntary contributions.

For 2022/23 the rate of Class 3 NIC is £15.85 a week.

You can pay Class 3 NIC for the current year by monthly Direct Debit or by quarterly payment request. You can pay contributions for previous years in a lump sum.

There is more information on Class 3 NIC and how to pay on GOV.UK.

What are Class 4 National Insurance contributions?

You pay Class 4 NIC if you are self-employed. You pay them in addition to Class 2 NIC, but Class 4 NIC do not count towards any state benefits.

There is detailed information in our self-employment section.

You pay Class 4 NIC together with any income tax payable through Self Assessment.

How do I pay National Insurance contributions?

How do I pay Class 1 NIC?

You pay Class 1 NIC through your earnings under the PAYE system. Your employer deducts Class 1 NIC from your gross wages before deductions, together with any income tax due, and pays you the net amount after deductions.

How do I pay Class 2 NIC?

You can pay Class 2 NIC together with the income tax due on your self-employment profits through Self Assessment. Alternatively, you can make payments regularly throughout the tax year using a Budget Payment Plan.

How do I pay Class 3 NIC?

You can pay Class 3 NIC for the current year by quarterly bill or by monthly Direct Debit.

You can pay Class 3 NIC for previous years by making a lump sum payment.

There is more information on the methods of payment on GOV.UK.

How do I pay Class 4 NIC?

You pay Class 4 NIC together with the income tax due on your self-employment profits through Self Assessment. To find out more see How do I pay tax on self-employed income?.

How do I claim a refund of overpaid or incorrectly paid National Insurance contributions?

There is a limit to the amount of NIC you need to pay in a tax year (across different classes of contribution). If you have had only one employment you should not have overpaid NIC. However, if your total earned income is more than the weekly upper earnings limit multiplied by 53 (£967 x 53 = £51,251 in 2022/23) then it is possible that you may have overpaid NIC.

HMRC do not reconcile each individual’s NIC. This is because it is relatively uncommon for an individual to have paid the wrong amount of NIC.

You might find you have overpaid NIC in certain circumstances, for example:

  • you carried on working after state pension age and your employer continued to deduct Class 1 NIC;
  • you paid Class 4 NIC on profits from self-employment in respect of a tax year after the one in which you reached state pension age;
  • you had two or more employments on which you paid Class 1 NIC;
  • you were employed and self-employed at the same time and paid Class 1, Class 2 and Class 4 NIC.

If you overpay NIC or pay NIC incorrectly, you can claim a refund.

You cannot claim a refund of NIC simply because you stop work or do not work for the whole tax year.

You cannot claim a refund of NIC simply because you are leaving the UK to live in another country. For more information visit the migrants section.

There is a tool to help you apply for a refund of NIC on GOV.UK.

How do I check my National Insurance contributions record?

HM Revenue & Customs (HMRC) keep a record of the NIC individuals pay. It is possible for you to check your NIC record by:

  • logging into your Personal Tax Account;
  • applying online, using the form on GOV.UK;
  • phoning HMRC’s National Insurance enquiries helpline – you can find the details on GOV.UK;
  • writing to HMRC (you can find an address on GOV.UK).

Where can I find more information about National Insurance contributions?

Employment 

If you are an employee, you can find more information on NIC in the employment section. This includes information on what happens in the following situations:

  • You have more than one employment.
  • You are both employed and self-employed.
  • You receive a low-interest or an interest-free loan from your employer.
  • You are a part-time worker and you have been asked to work more hours.
  • Your yearly income is less than the annual primary threshold, but you have paid Class 1 NIC.
  • Salary sacrifice and Class 1 NIC.

Self-employment

If you are self-employed, you can find more information on NIC in the self-employment section. This includes information on what happens if you are both employed and self-employed.

Pensioners

If you have reached state pension age and continue working, you can find more information on NIC in the pensioners section.

Migrants

If you are a migrant, you can find more information on NIC in the migrants section. This section looks at your NIC position depending on which country you have come from to the UK.

Reduced rate Class 1 National Insurance

If you are a woman who married before 6 April 1977 and who elected before 12 May 1977 to pay reduced rate Class 1 NIC, you can find more information on GOV.UK.

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