How much you pay depends on your combined wages and your self-employed work. Check what you need to do. To help us improve GOV. It will take only 2 minutes to fill in. Cookies on GOV. UK We use some essential cookies to make this website work. Accept additional cookies Reject additional cookies View cookies. Hide this message. Home Money and tax National Insurance. Where an individual has more than one job, or earnings from both employment and self-employment, NICs are charged separately on each.
Low earners thus pay less NICs if their earnings are split across jobs, but high earners do not pay more NICs if their earnings are split across jobs. Employer NICs have, in effect, a tax-free threshold per employer as well as a tax-free threshold per employee.
This takes many small employers out of paying employer NICs altogether, although much employer NICs revenue comes from big employers which are not eligible for the employment allowance. Two groups of employees have their earnings taxed less heavily:. The rates of the two are therefore not directly comparable, and when looking at the overall level of NICs on employment, the headline rates should not simply be added up and compared with the level of gross earnings see the technical note below.
A more informative calculation is to look at total NICs paid as a fraction of the total amount the employer pays out i. Read more applying between the primary threshold and the UEL — is not When considering the total NICs charged on a job, it is tempting simply to add up employee and employer NICs and look at how the total relates to earnings.
However, that is not very informative and can be misleading. The problems with simply adding up employee and employer NICs rates arise because employee NICs are taken out of earnings while employer NICs are paid on top of earnings.
If it were all employee NICs, the employee would receive half of what the employer paid out; if it were all employer NICs, the employee would receive two-thirds of what the employer paid out. Worse, looking at total NICs relative to earnings is potentially misleading. This rate and the equivalents for different levels of labour cost are shown in the chart below.
The chart below shows the combined rates of employee and employer NICs. The chart highlights that, while NICs are progressive A tax is progressive if tax liability increases more than in proportion to the tax base, or to income. Read more across most of the earnings distribution — the average tax rate The amount of tax paid as a percentage of the tax base typically income. Read more is higher for those earning more — it is not progressive A tax is progressive if tax liability increases more than in proportion to the tax base, or to income.
Read more at the top. The average rate peaks at The chart ignores employment allowance. Current NICs rates for the self-employed are shown in the table below. The total NICs levied on self-employment income are therefore much lower than those on employment income, as shown in the chart below.
There is no good justification for the preferential NICs treatment of self-employment. Self-employed NICs lines include Class 2 contributions in the average rate, but exclude them in the marginal rate. However, the link between contributions and benefits has weakened over time, to the point where there is now barely any connection at all between the amount of NICs paid and the amount of benefits received.
Throughout the many reforms to both contributions and benefits that have taken place over the years, minimal attention has been paid to closeness of the link between the two. By far the biggest contributory benefit is the state pension. But it is now quite hard to live in the UK and not earn entitlement to a full state pension. The contributory system does serve to withhold certain benefit entitlements from some small groups. But its main practical function nowadays is to ensure that foreigners cannot retire to the UK and claim a full state pension.
There may be a case for a genuine social insurance system, but it is not what we currently have. There are still a number of contributory benefits:. Some other historical benefits are still being paid for which entitlement depends on past contributions, but new contributions no longer generate new entitlements to them.
We do not describe these benefits here, or the complicated rules that relate contributions to entitlements. The important fact is that in practice there is very little link between the amount of contributions someone pays and the benefits they receive, for several reasons:. The self-employed accrue entitlement to contributory benefits via their Class 2 not Class 4 contributions.
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The figures shown indicate what you'd owe on an annual basis, and assume you've worked for the full tax year. Find out more: tax for the self-employed — this comprehensive guide explains which taxes you are likely to have to pay. If you're missing any National Insurance contributions, you can fill in gaps by paying Class 3 'voluntary' contributions. Find out more: making voluntary National Insurance contributions. Until , married women could opt to make National Insurance contributions at a reduced rate.
They stopped building up entitlement to state pension in their own right and instead relied on their husband's National Insurance contributions record. Women who took this option can continue to make reduced National Insurance contributions or pay at the full rate and build up individual pension entitlement. Since , any women in this position who have yet to reach state pension age will no longer be eligible.
Their pension entitlement will depend instead on the number of qualifying years' National Insurance contributions they have made in their own right. The minimum required to get any state pension is 10 years. Find out more about the state pension in our expert guide. Financial Services Limited. Financial Services Limited is a wholly-owned subsidiary of Which? Limited and part of the Which? Money Compare is a trading name of Which?
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