National Insurance (NI) | Easy Money Calc Glossary

The UK social-insurance contribution funding state pension and welfare benefits, paid by employees, employers, and the self-employed in separate classes.

National Insurance (NI) is the UK’s contributory social-insurance system. It funds the State Pension, contribution-based welfare benefits, and the NHS budget indirectly. Unlike income tax, NI is paid on weekly or monthly earnings within each pay period — and the bands reset, so a one-off bonus is taxed alongside the rest of the month rather than being smoothed across the year.

There are four main classes:

Class 1 (employees): paid through PAYE on earnings above the primary threshold.
Class 1A/B (employers): paid by the employer on employee pay above the secondary threshold and on most BIK perks.
Class 2 (self-employed): a small flat weekly charge — being phased out from 2024-25 onwards but still relevant for voluntary contributions.
Class 4 (self-employed): paid via self-assessment on profits above the lower profits limit.

A continuous NI record is what unlocks the State Pension at retirement age — 35 qualifying years for the full new State Pension, 10 for any payment at all. Missed years can be plugged with voluntary Class 3 contributions, although the deadline for the historical 2006–2016 buyback expired in April 2025.

Use the National Insurance calculator for employee Class 1 maths or the self-assessment calculator for Class 4.