What Are National Insurance Contributions?
National Insurance (NI) contributions are a tax on earnings and self-employed profits paid by:
- employees;
- employers and
- the self-employed.
They can help to build your entitlement to certain state benefits depending whether you are employed or self-employed. Your entitlement is also known as your national insurance or NI record.
Which Benefits Are Dependent on My NI Record?
Benefits which depend on your NI record include:
- Maternity Allowance - a weekly payment for some women who are pregnant or have recently given birth;
- Contribution-based/New Style Jobseeker's Allowance (JSA) - can be claimed by the unemployed for up to 6 months;
- Contribution-based/New Style Employment and Support Allowance (ESA) - can be claimed if you have a low income job;
- Bereavement Benefits - can be claimed if your husband, wife or civil partner die before you have reached the state pension age;
- Basic State Pension- can be claimed if you reached state pension age on or before 5th April 2016 and
- New State Pension- can be claimed if you reached state pension on or after 6th April 2016.
Benefits which do not depend on your NI record include:
- Attendance Allowance - can be claimed by those who have reached pension age and have care needs;
- Disability Living Allowance (DLA) - can be claimed by those who have extra care needs or mobility needs (difficulty getting around) as a result of a disability;
- Personal Independence Payment (PIP) - replaced DLA an can be claimed by those aged under pension age who have extra care needs;
- Child Benefit - can be claimed by a parent brining up a child;
- Guardian's Allowance - can be claimed by a person who is looking after a child who is not their own;
- Universal Credit - can be claimed by people who are at a working age and on low incomes and
- Carer's Allowance - can be claimed by people who spend at least 35 hours a week providing regular care to someone who has a disability.
What Are The Rates Of National Insurance?
Class 1 National Insurance Employees
!Autumn 2023 budget update! - The main rate of employees national insurance will fall from 12% to 10% from April 2024.
Class 1 National Insurance Employers
Class 2 National Insurance Self Employed
!Autumn 2023 budget update! - class 2 contributions will be abolished as of April 2024.
Class 3 National Insurance Volunatry
Class 4 National Insurance Self Employed
!Autumn 2023 budget update! - The main rate of class 4 contributions will fall from 9% to 8% from April 2024.
