If you are employed or self-employed and are 16 or older but not yet eligible for the state pension, you must pay NIC. The amount of NIC you pay is determined by your income.
The sort of NIC you pay is determined by how you work. Employees and other workers (such as those engaged by agencies) pay different sorts of NIC to self-employed people (that is, those who work for themselves).
Even if you continue to work, you stop paying NIC when you reach state pension age. The self-employed must pay Class 4 NIC until the start of the tax year following the year in which they attain state pension age.
You pay National Insurance on earnings, such as wages and profits from self-employment, but not on pension income.
You may use the GOV.UK calculator to figure out when you’ll be eligible for a state pension.
I am a student. Do I have to pay National Insurance contributions?
Students, especially overseas students, are not subject to any particular rules. You will be required to pay National Insurance contributions in the same way as other UK workers. If you need a National Insurance number or have lost yours, see our page How do I get a National Insurance number? for help. A National Insurance number may be included on the reverse of a biometric residency permit for migrants or international students.
What are National Insurance credits?
Even if you are not working, you may be eligible for National Insurance credits in certain circumstances. Some, but not all, entitlements are affected by these. The state pension is the primary benefit they are eligible for.
For the year in which you may be credited, you must be 16 or older and under the age of state pension.
You may be eligible for National Insurance credits in a variety of situations, including being unable to work due to illness or caring for someone else.
National Insurance credits are divided into two categories: Class 1 credits and Class 3 credits. The type of credit you may be eligible for is determined by your specific circumstances. To get National Insurance credits, you must meet specific requirements.
National Insurance credits should be given automatically in some cases, such as if you receive employment and support allowance or carer’s allowance. In other cases, you’ll have to file a claim.
GOV.UK has more information on the many situations in which you can be eligible for National Insurance credits, as well as how to apply for National Insurance credits.
Adult Specified Credits (also known as babysitting or grandparent’s credits) are discussed on a separate page.
What benefits do my contributions pay for?
To be eligible for various UK government benefits, you must have paid a particular amount of National Insurance Contributions (NIC). Contributory benefits are a type of governmental benefit. National Insurance credits will apply toward these contributory benefits in some situations, but not in others. On GOV.UK, you should carefully review the eligibility requirements. Many benefits rely on the payment (or credit) of enough NIC to generate a qualifying year.
Other benefits are available regardless of whether or not you have paid any or enough NIC, as long as the requirements for claiming apply to you.
To figure out which type of donation goes toward which benefit, look at the table below:
There are several exceptions to the aforementioned, such as share fishermen and volunteer development workers who work in other countries.
Contributions to Class 4 National Insurance do not count toward any state benefits.
What are Class 1 National Insurance contributions?
If you work for an employer, or if you are an employee, you must pay Class 1 NIC. Before paying you, your company deducts the NIC from your wages. Your company is also required to pay NIC on your earnings, but you do not have to be concerned about this.
In the employment section, there is full information about Class 1 NIC, including instances.
What are Class 2 National Insurance contributions?
If you are self-employed, you must pay Class 2 NIC. Our self-employment section has more information.
The Self Assessment system is how HMRC collects Class 2 NIC. This means you are exempt from paying contributions during the tax year. Your liability will become due at the end of the tax year, and you will be able to pay it with your Self Assessment tax bill.
If you are self-employed and subject to Class 2 NIC, you must ensure that you are both registered for Self Assessment and registered for Class 2 NIC on HMRC’s systems. If you fill out form CWF1 when you start your own business, this should happen immediately.
HMRC may automatically reject your Class 2 NIC if you submit self-employed profits on a Self Assessment tax return without completing a form CWF1 since they have no record of your liability. In this situation, you should call HMRC at 0300 200 3500 to request a correction.
In some conditions, persons who are working (or self-employed) overseas can additionally pay Class 2 NIC. Please read our migration section for further details.
What is the Small Profits Threshold?
If you’re self-employed and your profits fall below a certain threshold (the Small Profits Threshold), you won’t have to pay Class 2 NIC. The limit for 2021/22 is £6,515.
What are Class 3 National Insurance contributions?
You can pay Class 3 NIC if you do not pay either Class 1 or Class 2 NIC and do not obtain National Insurance credits, but you want to maintain your rights to particular state benefits. Donations that are made voluntarily are also known as voluntary contributions.
Class 3 NIC can be paid by monthly Direct Debit or quarterly payment request for the current year. You can make a one-time payment for previous years’ contributions.
What are Class 4 National Insurance contributions?
If you are self-employed, you must pay Class 4 NIC. Class 4 NICs are paid in addition to Class 2 NICs, but they do not count toward any state benefits.
Only if your profits exceed a particular threshold, known as the Lower Profits Limit, are you required to pay Class 4 NIC. For 2021/22, this is £9,568.
You must pay Class 4 NIC in addition to any self-assessment income tax.
How do I pay National Insurance contributions?
Under the PAYE system, you pay Class 1 NIC on your wages. Your employer deducts Class 1 NIC and any income tax owed from your gross wages before deductions, and gives you the net amount after deductions.
Self Assessment allows you to pay Class 2 NIC along with the income tax payable on your self-employment profits. Alternatively, you can use a Budget Payment Plan to make payments on a regular basis during the tax year.
HMRC is known to refuse Class 2 NIC payments if they are not correctly registered as being payable (see above).
You can pay Class 3 NIC by quarterly bill or monthly Direct Debit for the current year.
Self Assessment is how you pay Class 4 NIC and the income tax payable on your self-employment profits. See How do I pay tax on self-employed income? for additional information.
How do I claim a refund of overpaid or incorrectly paid National Insurance contributions?
The total amount of NIC you must pay in a tax year is limited (across different classes of contribution). If you’ve only had one job, you shouldn’t have overpaid NIC. However, if your total earned income exceeds the weekly upper earnings limit multiplied by 53 (£967 x 53 = £51,251 in 2021/22), you may have overpaid National Insurance Contributions.
The NIC of each individual is not reconciled by HMRC. This is due to the fact that paying the incorrect amount of NIC is relatively unusual.
- You continued to work after reaching state pension age, and your employer continued to deduct Class 1 National Insurance Contributions;
- You paid Class 4 NIC on self-employment profits in a tax year after the one in which you achieved state pension age;
- When your earnings were below the Small Profits Threshold limit, you paid Class 2 NIC as a self-employed individual;
- You were both employed and self-employed at the same time, and you paid Class 1, Class 2, and Class 4 National Insurance contributions.
You cannot get a NIC refund if you stop working or do not work for the entire tax year.
Simply because you are leaving the UK to reside in another country does not entitle you to a NIC refund. Visit the migration area for further details.
How do I check my National Insurance contributions record?
HM Revenue & Customs (HMRC) keeps track of how much NIC people pay. You can look up your NIC record by going to:
- contacting HMRC’s National Insurance Enquiries Helpline (information available on GOV.UK);
Can I claim UK national insurance back?
You may be eligible to pay National Insurance while you’re on vacation if you plan to:
If you leave the UK permanently, you will not be able to claim back any National Insurance contributions you have made. However, if you’re moving to one of the nations with which the UK has a social security agreement, any money you’ve paid could be applied to benefits in the new country.
How much tax do you get back when you leave the UK?
There is no limit to what you can do. The amount of UK tax you can claim back is determined by a number of criteria, including the amount of tax you paid in the UK and whether you had any other sources of income. Our clients who are leaving the UK receive an average tax return of almost £900. We’ll assist you in calculating the amount of tax relief you’re eligible for as part of our free consultation.
Which class of National Insurance Do you want a refund for?
Employed workers pay primary Class 1 contributions, while employers pay secondary Class 1 contributions.
If an employee has overpaid Class 1 NIC as a result of an error on the part of their employer, the employer should be allowed to repay the overpayments on the next pay day. If the employer is unable to process the refund, the employee should write to HMRC after the tax year has ended, stating the following:
Do I have to pay NI after 35 years?
Your new State Pension is based on your record of National Insurance contributions. Prior to April 6, 2016, all National Insurance contributions or credits on your record will be counted toward your new State Pension.
To earn a new State Pension, you normally need at least 10 qualifying years on your National Insurance record. It is not necessary to have ten qualifying years in a row.
- You obtained NI credits as a result of unemployment, sickness, or your role as a parent or carer.
If you didn’t have a National Insurance record before April 6, 2016, you’ll need 35 qualifying years to obtain the full new State Pension.
If you’ve lived or worked in another country, you may still be eligible for a new State Pension.
You may also be eligible if you’ve paid reduced-rate contributions for married women or widows.
How much NI should you pay?
The amount of National Insurance you pay is calculated as follows: 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 2% of your weekly profits in excess of £967
Can you over pay National Insurance?
It’s possible to pay too much in National Insurance. If you’ve paid National Insurance after reaching the state pension age, if you’re well-paid and have multiple jobs, or if you’re working and self-employed with high earnings but haven’t applied for deferment.
Does overpaid tax get refunded automatically?
It’s possible that you’re still paying too much or too little tax. For example, if you received a company benefit or salary increase that HMRC was unaware of, and as a result, your tax code was not updated.
HMRC will give you a P800 or a Simple Assessment tax computation if you have not paid the correct amount at the end of the tax year.
Your P800, also known as a Simple Assessment, will explain you how to seek a refund or pay back any taxes you owe.
Do HMRC automatically refund overpaid tax?
Is it possible to get a refund from HMRC if you have overpaid tax? Yes, HMRC does refund overpayment tax, sometimes automatically and occasionally via a refund application. It’s critical to stay on top of your tax situation because there are deadlines for filing a claim for unpaid taxes and applying for a tax refund.