National Insurance
A system of compulsory contributions paid by employees, employers, and the self-employed that funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Pay. Different classes of NI apply depending on your employment status: Class 1 for employees, Class 2 and Class 4 for the self-employed. Your NI record — built up through years of qualifying contributions — directly determines your entitlement to the State Pension.
Related Terms
Class 1 National Insurance
National Insurance contributions paid by employees and employers on earnings above the Primary Threshold.
Class 2 National Insurance
A flat-rate National Insurance contribution historically paid by self-employed people to build entitlement to the State Pension and other contributory benefits.
Class 4 National Insurance
National Insurance paid by self-employed individuals on their taxable profits, calculated as part of their Self Assessment tax return.
NI Number
A unique personal reference number issued to UK residents to track their National Insurance record, in the format two letters, six digits, one letter (e.
Primary Threshold
The level of earnings above which employees start paying Class 1 National Insurance contributions, set at £12,570 per year (£242 per week) for 2025/26.
Upper Earnings Limit
The earnings level above which employees pay a lower rate of Class 1 National Insurance, currently set at £50,270 — aligned with the higher-rate income tax threshold.
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