National Insurance is a tax on earnings in the United Kingdom that funds the state pension, certain welfare benefits, and the National Health Service. Both employees and employers pay it, and so do self-employed workers. Unlike general taxation, your National Insurance contributions also build a personal record that determines whether you qualify for the state pension and other contributory benefits later in life.
What National Insurance Pays For
National Insurance contributions flow into the National Insurance Fund, which is separate from general tax revenue. The Fund pays for contributory benefits: the state pension, bereavement support, contribution-based Jobseeker’s Allowance, and Employment and Support Allowance. Other social security benefits, such as Universal Credit and income-based support, come from general taxation instead. A portion of National Insurance revenue is also allocated to help fund the NHS.
This distinction matters because your entitlement to contributory benefits depends on your personal National Insurance record. If you haven’t paid or been credited with enough contributions over the years, you may receive a reduced state pension or none at all.
How Employee Contributions Work
If you’re employed, under State Pension age, and earning more than £242 a week (£12,570 a year) from a single job, your employer automatically deducts Class 1 National Insurance from your pay. For the 2025-26 tax year, the rates are:
- 8% on weekly earnings between £242 and £967 (roughly £12,570 to £50,270 a year)
- 2% on anything you earn above £967 a week
So if you earn £30,000 a year, you pay 8% on the portion above £12,570, which works out to about £1,394 per year. You pay nothing on earnings below the primary threshold of £12,570. There’s also a lower earnings limit of £125 a week (£6,500 a year): if you earn between that amount and the primary threshold, you won’t owe any National Insurance, but the contributions are treated as paid for record-keeping purposes. That protects your future pension entitlement even though no money leaves your paycheck.
What Employers Pay
Employers pay their own National Insurance on top of what employees contribute. The employer secondary threshold for 2025-26 is £96 a week, or £5,000 a year, meaning employers owe contributions on a larger slice of each worker’s pay. Employers also pay Class 1A and Class 1B contributions on certain benefits and expenses they provide to staff, such as company cars or private medical insurance. These employer costs don’t appear on your payslip, but they are a significant part of the total cost of employing someone.
National Insurance for the Self-Employed
If you work for yourself, you deal with two classes of National Insurance. Class 2 contributions protect your National Insurance record. If your annual profits are £7,105 or more, Class 2 is treated as having been paid automatically, so you don’t need to do anything extra. If your profits fall below that amount, you can choose to pay voluntary Class 2 contributions to avoid gaps in your record.
Class 4 contributions kick in when your profits exceed £12,570 a year. These are calculated as a percentage of your taxable profits and collected through your Self Assessment tax return. Think of Class 2 as the piece that builds your benefits record and Class 4 as the main tax charge on your self-employed earnings.
Voluntary Contributions
Class 3 contributions are voluntary payments anyone can make to fill gaps in their National Insurance record. You might consider them if you earned less than £129 a week from a job, took time off work, or lived abroad for a period. Since gaps in your record can reduce your future state pension, voluntary contributions are sometimes a cost-effective way to protect that entitlement. HMRC can tell you whether you have gaps and what it would cost to fill them.
Why Your National Insurance Record Matters
Your National Insurance record is measured in “qualifying years.” You get a qualifying year when you’ve paid enough contributions or received credits for that tax year. To receive any new state pension at all, you need at least 10 qualifying years. The more qualifying years you accumulate, the higher your pension, up to the maximum for a full pension.
Your record also affects eligibility for other contributory benefits. If you lose your job, for example, contribution-based Jobseeker’s Allowance depends on having sufficient Class 1 contributions in recent tax years. A thin record can leave you relying on means-tested benefits instead.
National Insurance Credits
You don’t always have to pay contributions yourself to build qualifying years. In many situations, the government awards National Insurance credits that count toward your record. Some credits are automatic, and others require an application.
- Parents and carers: If you’re registered for Child Benefit for a child under 12, you receive Class 3 credits automatically, even if you don’t actually receive the benefit payment. Foster carers can apply for credits too.
- Maternity and parental leave: If you’re receiving Maternity Allowance, you get Class 1 credits automatically. If you’re on Statutory Maternity, Paternity, or Adoption Pay but don’t earn enough to make a qualifying year, you can apply for credits.
- Unemployment and illness: Claiming Jobseeker’s Allowance or Employment and Support Allowance typically generates credits. People on government-approved training courses also receive them.
- Jury service: If you’re not self-employed and you attend court for jury duty, you can write to HMRC to claim Class 1 credits for that period.
- Armed forces spouses: If you accompanied a partner on an overseas military posting, you can apply for credits to cover that time.
Credits are especially important for people who step away from paid work for caregiving. Without them, years spent raising children or looking after relatives would create gaps that shrink your pension. One group that generally cannot receive credits is married women paying the reduced “married woman’s rate” of National Insurance, an older arrangement that some women opted into decades ago.
How to Check Your Record
You can view your National Insurance record online through your Personal Tax Account on GOV.UK. It shows how many qualifying years you have, whether there are any gaps, and whether you can fill those gaps with voluntary contributions. If you’re more than a few years from State Pension age, checking periodically gives you time to address shortfalls while voluntary contributions for those years are still available. HMRC typically allows you to pay for gaps going back up to six years, though some older gaps may also be eligible under transitional rules.
Your National Insurance Number
Your National Insurance number is a unique identifier that tracks your contributions and tax records. Most people living in the UK are assigned one automatically before they turn 16. If you’ve moved to the UK to work, you’ll need to apply for one. You don’t need the physical card to start working, but your employer will ask for the number so they can report your earnings and contributions correctly. Losing the card isn’t a problem since the number itself never changes. You can find it on old payslips, tax letters, or by requesting it from HMRC.