Types of National Insurance
There are different types of National Insurance, known as ‘classes’, and the class that you pay depends on the source of income.
- Class 1 (Primary): Employees pay this on the wages they earn working for an employer.
- Class 1 (Secondary): Paid by employers as a contribution towards their employees’ National Insurance.
- Class 1A or 1B: Some employers may also need to make NI contributions on the equivalent financial value of any work benefits if they provide them to employees based on the P11D submission.
- Class 2: Self-employed people pay Class 2 NI on what they earn through their business activities.
- Class 3: These are voluntary contributions that you can make if you need to top up the amount of National Insurance you paid in a tax year.
- Class 4: Depending on how much they earn, self-employed people might also pay Class 4 National Insurance on income earned from their business activities.
NI Thresholds
There were several changes to National Insurance thresholds during the 2022/23 tax year. The thresholds at which employees and self-employed people start making NI contributions on their earnings increased in July 2022, and then the rate for some types of National Insurance changed in November 2022. The government has confirmed that the National Insurance thresholds should remain frozen until April 2028.
Class 1 – Employee
Primary Threshold
- 6th April 2022 – 5th July 2022 £9,880 – monthly allowance of £823.33
- 6th July 2022 onwards £12,570 – monthly allowance of £1,047.50
2023/24 Tax Year – the primary threshold is £12,570 – monthly allowance of £1,047.50.
Upper Earnings Limit (UEL)
2022/23 Tax Year – any amount of income earnt above the primary threshold up to £50,270; the NI rates are the following –
- 6th April – 5th November: 13.25%
- 6th November onwards: 12%
2023/24 Tax Year – Upper Earnings Limit remains at £50,270; NI rate is 12%
Earnings above the Upper Earnings Limit
2022/23 Tax Year – any amount of income earnt above the Upper earning limit; the NI rates are the following –
- 6th April – 5th November: 3.25%
- 6th November onwards: 2%
2023/24 Tax Year – any amount of income earnt above the Upper earning limit; the NI rate is 2%
Class 1 – Employer
2022/23 Tax Year – in this tax year the threshold was £9,100, any income earnt by an employee below this amount is exempt from paying NI employer. Any amount earnt above £9,100; the NI rates are the following –
- 6th April – 5th November – 15.05%
- 6th November onwards: 13.80%
2023/24 Tax Year – the threshold remained at £9,100 and the NI rate remained at 13.80%.
The National Insurance Employment Allowance for employers in 2022/23,2023/24 tax year is £5,000.
Class 2 and Class 4 – Self-employed
For the 2022/23 tax year any income earnt below £11,900 will be exempt from NI. Any amounts earnt above this figure you will need to pay Class 2 and Class 4 NI. Class 2 is a fixed weekly rate of £3.15 and Class 4 rate is 9.73% up until earnings of £50,270 (Lower Profits Limit). Any amounts earnt above Lower Profits Limit, the NI rate is 2.73%.
For the 2023/24 tax year any income earnt below £12,570 will be exempt from NI. Any amounts earnt above this figure you will need to pay Class 2 and Class 4 NI. Class 2 is a fixed weekly rate of £3.45 and Class 4 rate is 9% up until earnings of £50,270 (Lower Profits Limit). Any amounts earnt above Lower Profits Limit, the NI rate is 2%.
