How Much National Insurance do I Pay as an Employee?

how much national insurance do i pay

How Much National Insurance do I Pay as an Employee?

Many of our customers ask this question “How much national insurance do I pay as an employee?” Responding to their query, we’ve written this blog post for your assistance. Besides, we’ll also discuss the common issues that people face when it comes to NIC.

As an employee, you have to pay Class 1 National Insurance Contributions on your earnings from the income received in the form of bonuses or salaries. The NICs that you’re liable to pay depends on your earning within a specific time.

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How much National Insurance do I pay as an Employee?

 

There is a defined limit or threshold of NIC by the UK government that you need to pay as an employee. If your income falls below the NIC’s threshold, you might pay zero NIC. The minimum threshold to get exemption from NIC is £184 a week or £797 a month in 2021/22.

The amount of Class 1 NIC that you pay depends on the upper limit of your earning, which is £967 per week or £4,189 per month in 2021/22.

In 2021/22, employees need to pay NICs as follow:

Weekly IncomeNIC Rate
On first £184Nil
Between £184 and £96712%
Above £9672%

Here are the monthly rates of Class 1 NIC for employees.

Monthly Income NIC Rate
On first £797Nil
Between £797 and £4,18912%
Above £4,1892%

The Class 1 NICs is calculated on a weekly or monthly basis depending on whether you receive your income weekly or monthly.

how much national insurance do i pay

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What if I earn less than the weekly/monthly threshold?

 

If you’re earning below the primary threshold (£184 per week / £797 per month) or below the lower-earning limit (£120 per week / £520 per month), you don’t need to pay Class 1 NIC. By paying NIC at zero rate, you may claim contributory benefits and the state pension. You can get details of state pensions on the government website.

 

What if I have two jobs?

 

Like the first job, you would be paying NIC for the second job as well. As you are going to pay tax and NIC on the income that you will earn. However, income tax and NIC work differently. For tax, you get a single tax-free amount for the whole year. Whereas for NICs, there would be a separate limit for each job. Each job would have a different threshold of NIC.

 

What if I am both employee and self-employed?

 

In such case, you must pay:

  • Class 1 NIC on your normal income from your pay
  • Class 2 and Class 4 NIC on the income earned as self-employed

You should remember that Class 1 NIC would be paid on the payday. While Class 2 NIC are not paid before 31 January. Class 4 NIC is collected along with income tax liabilities in your balancing payments and payment on accounts.

 

Quick Sum Up:

 

Hopefully, you have got the answer to ‘how much national insurance do I pay?’ We have discussed some of the most common queries related to NICs.

If you have any other questions, feel free to reach out.

Accotax has a team of certified chartered accountants in London who’ll help you to reduce your income tax and national insurance. 

Get an instant quote right away!

 

Disclaimer: This blog is written for your general information on NIC.

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