Searching for the national insurance rates set by HMRC for the UK? Then read on! Here you’ll find a summary of national insurance rates for employers, employers and the self-employed.
Updated 22 November 2022
Table of contents
1. What is National Insurance?
National Insurance is a type of tax where UK workers (whether employed or self-employed) pay into a ‘pot’ which then entitles them to claim certain state benefits such as:
- Unemployment benefits
- Statutory sick pay
- Maternity pay
- Self-employed maternity allowance
- State pension
It is also referred to as ‘NI’ (national insurance) or Social Security and is payable by UK workers 16 and over. Individuals stop paying it once they reach the State Pension Age. The government track how much national insurance a person has contributed by their national insurance number.
There are 4 different types of NI classes and the type payable depends on status:
- Class 1 paid by employees automatically deducted through their payslips;
- Class 1a paid by employers on their employees gross salary and benefits in kind;
- Class 2 paid by self-employed individuals on their taxable business profits;
- Class 3 voluntary contributions to fill or avoid gaps in national insurance records;
- Class 4 paid by self-employed individuals on their taxable business profits (this is in addition to class 2).
2. Class 1 National Insurance Rates
Anyone who is employed pays Class 1 National Insurance, the amount they pay is based on their earnings. Here are the 2021/2022 Class 1 National Insurance Rates:
|Employees Class 1 National Insurance 2021/2022||Weekly||Monthly||Annually|
|Lower Earnings Limit (LEL)|
Employees do not pay National Insurance but
get the benefits of paying
|Primary Threshold (PT)|
Employees start paying National Insurance
|Secondary Threshold (ST)|
Employers start paying National Insurance
|Upper Earnings Limit (UEL)|
All employees pay a lower rate of National Insurance
above this point
|Employee Rates||12%||Between the Primary Threshold and Upper Earnings Limit|
|2%||Above Upper Earnings Limit|
|Employer Rates||13.8%||Above the Secondary Threshold|
2.1 The Lower Earnings Limit
The Lower Earnings Limit (LEL) is the amount an individual can earn without paying national insurance, but without suffering gaps on their national insurance record so keeping their entitlement to claim state benefits.
3. Class 1a Employer National Insurance Contribution Rates
- Tax Year 2021/2022: Over £170 per week/£737 per month/£8,840 per year 13.8%
- Tax Year 2020/2021: Over £169 per week/£732 per month/£8,788 per year 13.8%
- Tax Year 2019/2020: Over £167 per week/£727 per month/£8,722 per year 13.8%
There is an additional level called the upper secondary threshold where the employer NI rate is 0% for certain employees under 21, apprentices under 25 and certain military veterans.
Upcoming changes to the secondary threshold have been announced as part of the Autumn Budget and include an increase of the employers’ NI rate payable to 15.05% from 13.8% from the tax year 2022/2023. That’s an increase of 1.25% in line with the new taxation for the NHS and social care. Read more about the Autumn Budget Changes.
4. Class 2 National Insurance Contribution Rates
Class 2 NI is only paid by self-employed individuals on their taxable business profits, here are the recent rates:
- Tax Year 2021/2022: £3.05 per week on profits over £6,515 per year;
- Tax Year 2020/2021: £3.05 per week on profits over £6,475 per year.
5. Class 4 National Insurance Contribution Rates
Class 4 NI is only paid by self-employed individuals, again on their taxable business profits, via their tax returns. The recent rates are:
- Tax Year 2021/2022: 9% on profits between £9,658 and £50,270 and 2% on profits thereafter;
- Tax Year 2020/2021: 9% on profits between £9,501 and £50,000 and 2% on profits thereafter.
Increases to class 2 and 4 national insurance rates of 1.25% have been applied in accordance with the Chancellors promise to raise money to fund the NHS and social care as announced in the Autumn Budget.
Taxes are changing! From April 2024 sole traders will need to report their earnings and pay tax on a quarterly basis. This is known as Making Tax Digital, which you can read more about in this guide to help you get prepared.