Just in case you don’t already know what National Insurance Contributions (NIC) are, they are a compulsory payment to be made by an employee(s) and employer(s) and go to help provide State Assistance for people who are sick or unemployed.
You also pay NIC so that you will be eligible to qualify for other benefits, such as a state pension when you retire.
You need a National Insurance Number before you can start paying NIC.
If you are any of the following, you will pay NIC:
- Aged 16 or over.
- An employee earning above £155 per week.
- Self-employed and making a profit of £5,965 or more a year.
National Insurance Contribution Classes
There are different types of NIC which are known as classes. The type that you pay depends on your employment status and also on how much you earn and whether or not you have any gaps in your NIC record.
Currently there are 5 different NIC classes.
Class 1 – Employees that are earning more than £155 a week and are under state pension age will have their NIC deducted by their employer.
Class 1A or 1B – Employers pay these directly on their employees’ expenses or benefits.
Class 2 – Self-employed people – you don’t have to pay if you earn less than £5,965 a year (but you can choose to pay voluntary contributions).
Class 3 – Voluntary contributions can be paid by yourself in order to avoid or fill any gaps in your NIC record.
Class 4 – Self-employed people earning profits over £8,060 a year.
If you have any further questions about National Insurance or you want to enquire about the services that we provide here at K A Farr & Co then please feel free to get in-touch with us via phone on 01704 211434 or via email on email@example.com and one of the team will be more than happy to help you.