National Insurance contributions (NICs) are payments that build entitlement to the State Pension and some benefits. This guide explains the classes that affect employees and the self-employed.
Published July 2026 · Updated July 2026
National Insurance is a contribution paid by workers and employers that funds and builds entitlement to the State Pension and some benefits. It is charged separately from Income Tax and has its own thresholds.
Employees pay Class 1 NICs on earnings above a threshold, deducted through PAYE, and their employer pays a separate employer's contribution. The self-employed pay Class 4 NICs on their profits through Self Assessment; the rules for Class 2 changed from April 2024. Rates and thresholds change regularly, so check the current figures.
Usually yes, on the same earnings but calculated separately, each with its own threshold and rate.
Your contribution record builds entitlement to the State Pension and some benefits, so gaps can affect what you receive later.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.