National Insurance Contributions

If you are aged between 16 and 65 you will pay National Insurance (NIC) on your earnings or business profits.

There are four classes of National Insurance and you will pay different NIC depending on whether you are an employee of your own Limited Company or self-employed.

Class 1

Class 1 is paid by employees and their employers.  Once earnings are over the primary threshold you will pay employees national insurance at

  • 12% if you earn more than £149 a week up to £797 a week; and
  • 2% of all your earnings over £797.

Your own Limited company will pay employer’s national insurance on all earnings over the secondary threshold at 13.8%.

Class 2

Class 2 NIC is payable as a fixed amount each week of £2.70 once your earnings exceed £5,725.  If you are both self-employed and employed you may wish to opt out of this payment.

If you are self-employed, you will stop paying Class 2 contributions as soon as you reach State Pension age.

Class 3

This is very rarely paid.

Class 4

Class 4 contributions are paid by the self-employed on your earnings between £7,755 and £42,475.  The rate is 9%.  For earnings in excess of £42,475 the contribution rate is 2%.

Class 4 contributions cease from the start of the tax year after the one in which you reach State Pension age.