How are my National Insurance contributions calculated?

Your National Insurance contributions (NICs) are worked out on your gross earnings or your taxable self-employed profits after expenses. For employees, this may include some expenses and benefits in kind paid by your employer.

There are six classes of contributions, but the following two are of interest to employees:

  • Class 1 – employees (in 2017-18 earning more than £157 a week) and under State Pension age - they’re automatically deducted by your employer; and
  • Class 3 – voluntary contributions paid by people who wish to fill or avoid gaps in their National Insurance record to protect their entitlement to a State Pension.

The actual calculation of NICs is done using contribution tables supplied to your employer by HM Revenue and Customs. The amount payable will be based on your gross earnings between lower and upper limits. You begin paying National Insurance once you earn more than £157 a week (this is the figure for the 2017-18 tax year).

If you earn between £113 (the “Lower Earnings Limit”) and £157 a week (the “Primary Threshold”) your contributions are treated as having been paid to protect your National Insurance record (you get NI Credits).

The National Insurance rate you pay depends on how much you earn: 12% of your weekly earnings between £157 and £866 (the “Upper Earnings Limit”) and 2% of your weekly earnings above £866. These rates are generally set each year in the Budget.

The GOV.UK website has a full guide to current NI rates and categories. If you'd like to get a picture of how much tax and NI you're likely to pay on your salary, try our online Tax Calculator.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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