A National Insurance contribution (NIC) is a payment made by employees, employers and self employed people to fund UK state benefits such as the State Pension, statutory payments and certain welfare programmes.
What is the National Insurance contribution?
National Insurance contributions (NICs) are payments collected through payroll or Self Assessment that help fund a range of state benefits. Employees have NICs automatically deducted from their wages through PAYE, while employers also pay a contribution on top.
Self‑employed people pay NICs through their annual tax return. The amount someone pays depends on their earnings and employment status.
Keeping up with NICs helps individuals qualify for benefits such as the State Pension, Statutory Sick Pay and parental leave payments.
Things to know
- NICs are deducted automatically from employees’ pay
- Employers also pay NICs for each employee
- Self‑employed people pay NICs through self‑assessment
- NICs help fund state benefits, including the State Pension
- The amount paid depends on earnings and employment category
FAQs
Who has to pay National Insurance?
Most employees and self employed people aged 16 or over pay NICs once they earn above certain thresholds.
Do NICs affect the State Pension?
Yes. You need a minimum number of qualifying years of NICs to receive the full State Pension.
How are NICs collected?
Employees pay through PAYE. Self employed people pay through their self assessment tax return.
Do employers pay NICs too?
Yes. Employers pay a separate contribution based on each employee’s earnings.
Can someone check their NIC record?
Yes. Individuals can view their National Insurance record through their HMRC online account.
