| National Insurance contributions (NICs) are paid to | | | | These are normally paid either quarterly via a bill |
| build up a person's entitlement to certain state | | | | from HMRC or monthly by direct debit. |
| benefits, including the State Retirement Pension. | | | | Class 3 - These are voluntary National Insurance |
| The amount that an individual is liable to pay | | | | Contributions, in certain circumstances some |
| depends on their own personal circumstances. | | | | people may wish to make these. For example, |
| Who pays National Insurance? | | | | but not limited to, you have not made sufficient |
| National Insurance is payable by all UK individuals | | | | contributions in the year or perhaps you are living |
| aged over 16 that are either employed or | | | | abroad but want to maintain your potential UK |
| self-employed and their earning are above a | | | | state benefits. It is highly recommended that you |
| certain level. If you are an employee and reach | | | | speak to an experienced professional prior to |
| the state retirement age you are no longer | | | | making such contributions. |
| required to make NICs. Similarly if you are | | | | Class 4 - These are payable by self-employed |
| self-employed and reach the state retirement age | | | | people in addition to Class 2 contributions, if their |
| you immediately are no longer required to make | | | | income is above a certain level. The level of these |
| class 2 NICs, and from the tax year following the | | | | contributions are dependent on earnings. Class 4 |
| year you reached the state retirement age you | | | | National Insurance contributions are normally |
| are no longer required to make class 4 | | | | payable with income tax calculated on an |
| contributions. | | | | individual's Self-assessment tax return. |
| The various classes of National Insurance | | | | If you have any concerns about your National |
| contributions are detailed below: | | | | Insurance payments or record we suggest you |
| Class 1 - paid by employees, sometimes politicians | | | | contact a suitably qualified and experienced |
| have referred to this as "an employment tax" or | | | | professional such as a Chartered Accountant. |
| "a tax on Jobs". Two elements to class 1 | | | | The author does not guarantee the accuracy of |
| contributions which are employee's contributions | | | | any information provided in this article and |
| are deducted from an employees pay. Employer's | | | | recommends that you do not take any action, |
| contributions are paid by employers when they | | | | whatsoever, based on the information provided. |
| pay employees. | | | | By the fullest extent permitted by law, the author |
| Class 2 - this paid by self employed people. It is a | | | | does not accept any responsibility for any actions |
| flat rate regardless of earning (provided that the | | | | you may or may not take based on information |
| self-employed person has earning over a certain | | | | contained in this article. This article contains general |
| level, if earnings are lower than this level then a | | | | information and is not a substitute for specific |
| "small earning exemption" may be applied for). | | | | independent professional advice. |