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National Insurance

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
  • State pension
  • NHS

In most cases you’ll start paying national insurance once:

  • your employment earnings are above £166 a week
  • your self-employment profits are more than £6,365 a year

It is also referred to as ‘NI’ (national insurance) or Social Security and is payable by UK workers 16 and over. You stop paying it once you reach the State Pension Age.

The government track how much national insurance you have contributed by your national insurance number.

National Insurance Classes

There are four different types of NI classes. The class you belong to depends on your personal status.

You’ll pay a different rate of

National Insurance Contributions (NICs) are deducted by your employer each time you are paid. Or, if you are self-employed, once a year when you submit your self-assessment tax return.

National Insurance Categories

Your national insurance category indicates your personal status and shows how much you should be contributing.

Most people are given category ‘A’ but there are others:

Category Letter 
AStandard category and default for anyone who doesn't fit in another letter
BMarried women and widows entitled to pay reduced NI
CEmployees over the state pension age
JEmployees who defer NI contributions because they already pay the maximum in another job
HApprentices under 25
MEmployees under 21
ZEmployees under 21 who can defer National Insurance because they’re already paying it in another job
XUnder 16s who do not have to pay NI

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Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.