What are National Insurance Contributions?
Most people who work are liable to pay national
insurance contributions unless they come into any of the groups
excepted from liability to pay.
There are six classes of contributions in all,
and the class you pay depends on whether you are an employee,
self employed, non employed or an employer. Depending on your
status you may have to pay more than one class of contribution
at the same time.
Self employed persons are liable to pay two
classes of contributions:
- Class 2 insurance contributions, (soon to be abolished)
- Class 4 insurance contributions.
2 National Insurance Contributions
2 contributions are a flat rate payment. The rate for 2017/2018
is £148.20 per year
Unless you have applied
for and been granted a small earnings exception certificate
or are a married woman or widow with reduced liability, you
must pay class 2 contributions in respect of each week including
holiday periods, if you are:
normally self employed and
- aged 16 or over and
- under pension age.
Class 2 contributions
are paid together with class 4 contributions and any tax due.
4 National Insurance Contributions
If your profits are over a certain limit
you may have to pay class 4 contributions as well as class
4 contributions are based on annual profits and are calculated
at two rates. The rates for 2017/18 are 9% between a lower
and upper profit level and 2% for profits above the upper
profit level. The levels are set each year by the government
in the budget. For 2017/18 the levels are:
- lower profit level - £8,164
- upper profit level - £45,000
Class 4 contributions are normally
self assessed in the same way as tax, and collected by the
HM Revenue & Customs together with any Taxes due.