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When do I stop paying National Insurance?

August 25, 2021
Contributing over £145 billion of the government's income in the 2019/2020 tax year, National Insurance is an integral part of the UK economy, funding various state benefits such as maternity leave, statutory sick pay and the NHS.To receive the full state pension, you must work for over 30 years and pay regular National Insurance contributions or receive equivalent credits.You can read your NI record on the HMRC website to find out how much National Insurance you've paid, any credits that you might have received and if you've got gaps in your record. However, when exactly do you stop paying for National Insurance? In this article we cover who is eligible to pay National Insurance, how much you need to pay and what to do if you've overpaid. 

When do I stop paying National Insurance?

You can stop paying National Insurance (NI) once you've reached State Pension age if you pay Class 1 National Insurance or Class 2 National Insurance rates. This is the case even if you still work.If you are pay Class 4 rates, you will continue paying National Insurance contributions until the end of the tax year that you reached state pension age.You can find out the age that you qualify for state pension via the HMRC calculator. This tool will also tell you when you are eligible for a free bus pass.

What is National Insurance?

Everyone who works will have regular deductions made from their paycheques. The money will then go to a state pot to help fund benefits, the NHS and basic state pensions, among other things.State Pensions take the most significant portion out of the National Insurance Fund. The government expects to pay £101.2 billion on state pensions in the tax year 2020/2021.Your National Insurance number will help HMRC keep track of the tax and National Insurance contributions that you have made. Everyone is issued with a National Insurance number around three months before their 16th birthday. This number will appear on important documents like your payslips, P60s and taxes throughout your life.

National Insurance Record

You can request a printed report over the phone or online. In your request, you should include the tax years that you would like included in the report. You cannot include the current or previous tax year in the report.

National Insurance credits

Your NI record will include any National Insurance credits that you have received. You can receive National Insurance credits when you are unable to work and claiming benefits, such as Child Benefit or Universal Credit.Receiving credits will ensure that you can still qualify for benefits such as State Pensions, even if you haven't been paying National Insurance for a period of time.A Class 1 credit will help you qualify for benefits such as Jobseeker's Allowance, as well as your state pension. A Class 3 credit will contribute to your State Pension only.You should contact HMRC if you think that your National Insurance credits are wrong for any reason.You can find out if you're eligible to claim National Insurance credits through the HMRC website.

Who is eligible to pay National Insurance?

Anyone earning over a certain amount between 16 years old and the State Pension age is eligible to pay National Insurance.The age that you qualify for a State Pension will depend on your date of birth. If you were born before  before 6 December 1953, your State Pension age would be calculated using your legal sex alongside your date of birth.You can find out the age and year you qualify for a state pension using the HMRC calculator.You must pay National Insurance if you are employed and earn over £184 a week. Alternatively, you must pay National Insurance if you are self-employed and make a profit of more than £6,515 a year.

How much National Insurance do I have to pay?

The amount of National Insurance that you have to pay will depend on your circumstances and earnings. The class have different requirements and varying tax rates.The table below shows the eligibility for each class and the rate at which your earnings or company profits will be taxed.
ClassEligibilityRate for 2021/2022
Class 1
    Employed Earning £184+ a week Under state pension age
    12% if earning between £184 and £967 a week 2% if earning over £967 a week
Class 2
    Self-employed and profits of £6,515+ a year Living abroad and working
£3.05 a week
Class 3 (Voluntary Contributions)
    Employed and earning less than £120 a week Self-employed if they earn less than £6,515 a year Living abroad and not working Unemployed and not claiming benefits Married woman or widow who stopped paying reduced rates
£15.40 a week
Class 4Self-employed with profits of £9,569 or more a year
    9% on profits between £9,569 and £50,270 2% on profits of £50,270 or more
Your employer will automatically deduct National Insurance from your salary if you are in Class 1. Employers will pay the 13.8% Class 1A or Class 1B National Insurance rate on your expenses or company benefits.If you are self-employed with profits under £6,515, you can choose whether to pay Class 2 or Class 3. You will receive different benefits based on your choice.Many people choose to pay voluntary National Insurance so that they don't have gaps in their NI record. Voluntary contributions could help you improve your State Pension if you didn't previously have enough qualifying contribution years.It's worth seeking financial advice before you decide to pay voluntary contributions as it isn't guaranteed to benefit you in the future.

Do I pay National Insurance if I work abroad?

You may still be required to pay National Insurance in the UK even if you work abroad. Depending on your circumstances, you might instead be asked to pay Social Security to the country in which you reside. You won't have to pay both National Insurance and Social Security.You will pay National Insurance if you're self-employed and temporarily working abroad or you're sent abroad by your employer. You and your employer will need a Certificate of Continuing Liability to prove that you don't need to pay social security abroad.Your benefits and healthcare entitlements in the UK may be affected if you pay social security abroad. This is why some people choose to pay voluntary contributions at a later stage to make up for the gaps in their National Insurance records.You can pay Class 2 if you work whilst living abroad and Class 3 if you live abroad but don't work. You will need to have worked in the UK immediately before leaving to pay Class 2 rates. You'll also need to have lived in the UK for at least three years in a row and paid National Insurance contributions for a minimum of three years for both Class 2 and Class 3.

Do I pay National Insurance when I'm receiving my pension?

You don't have to pay National Insurance after you reach State Pension age unless you're self-employed and pay Class 4.You can stop paying Class 4 at the end of the tax year that you reach state pension age. The UK's tax year runs from 6 April to 5 April.You still have to pay Income Tax if your taxable income (including your private and State Pension) comes to more than the tax-free allowance. 

What happens if I don't pay National Insurance?

HMRC will send you a Notice of Penalty Assessment if you have missed National Insurance payments. The penalty charge will depend on how many missed payments you've had in a tax year.The penalty rates are as followed:
    1 to 3 missed payments – 1% charge4 to 6 missed payments – 2% charge7 to 9 missed payments – 3% charge10 or more missed payments – 4% charge
Daily interest will build up until you repay the total amount and penalties. You will also be charged if you pay less than the total amount.You can appeal against the penalty if there is a valid reason, such as a natural disaster, bereavement or theft.You will need to include the unique ID on your penalty notice when submitting your case to HMRC for review.

What do I do if I've overpaid National Insurance?

You can use the HMRC online form to find out how you can reclaim your class contribution if you suspect that you've overpaid National Insurance.Your employer can issue you a refund through the payroll system if you are in Class 1. If your employer is unable to pay, you should write to HMRC. Include a copy of your P60 or a statement from your employer as to why they cannot refund your overpayment.You should fill out a CA5610 form if you are in Class 4. You will need to wait until 1 February of the following tax year before submitting the form to HMRC.You can also write to HMRC at the end of the tax year so that they can help you resolve the issue. You will need to provide your National Insurance number, which tax year(s) you've overpaid in and why you think you've overpaid. 

How do employers pay National Insurance?

An employee's National Insurance is split between deductions from their salaries and contributions made by the employer. The contributions that you make as an employer will depend on the employee's salary. You will have to pay Class 1A and Class 1B on expenses and benefits that you give to your employee. This would include things such as health benefits, company cars and child care.The table below shows the set employer contributions for the tax year 2021/22.
Category LetterEarning between £120 to £170 a weekEarning between £170.01 to £967 a weekEarning over £967 a week
A0%13.8%13.8%
B0%13.8%13.8%
C0%13.8%13.8%
H0%0%13.8%
J0%13.8%13.8%
M0%0%13.8%
Z0%0%13.8%
You, as a business owner, are responsible for taking National Insurance and Income Tax contributions from your employees' salaries through the PAYE system. By signing up with Ember, you can use our payroll software to help you with the reports and to see the File Real Time Information (RTI) being sent to HMRC.
Daniel Hogan
Daniel HoganCOO & Co-Founder

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