Employment Class 1 National Insurance Calculator

What influences UK National Insurance Contribution (NI)?

National Insurance (NI) in the UK is a social security tax, paid by most employers and workers. The amount if NI that one needs to pay depends on a number of factors such as:

Earnings
Employment Status
Age
Employment Benefits
Working Hours

Who pays the six NIC classes, and what do they cover?

There are currently six different classes of National Insurance:

Class 1 – paid by both employees and employers on earnings from employment.
Class 1A – paid by employers only on benefits provided to employees.
Class 1B – paid by employers only on PAYE Settlement Agreements (PSAs).
Class 2 – a flat rate, the weekly amount paid by self-employed persons.
Class 3– voluntary contributions paid by taxpayers who wish to top-up their contribution record to preserve their entitlement to state benefits.
Class 4 – paid by self-employed persons on the profits from their trade.

How do NICs affect state benefits eligibility?

The total amount of NIC that a person pays affects their eligibility for benefits such as the State Pension, Jobseeker’s Allowance and Maternity Allowance. The higher the amount of NIC a person pays over their working life, the higher the amount of State Pension that they receive upon retiring.

What are the responsibilities for individuals and employers on NICs?

It is important for individuals and employers to understand their responsibilities for paying NICs and to ensure that they are paid accurately and on time. Failure to do so can result in penalties and interest charges from HMRC, along with a reduction in the entitlements to benefits.