National Insurance contributions

National Insurance contributions are a deduction from an employee’s salary.

Commonly abbreviated to NICs, National Insurance contributions qualify an employee for certain benefits such as the State Pension.

An employer will make National Insurance contributions to HMRC on behalf of the employee each payroll period through PAYE.

Self employed workers pay National Insurance contributions annually on request from HMRC in April.

National Insurance was introduced by the National Insurance Act 1911, and was subsequently expanded by the Labour government in 1948. It has been subject to numerous amendments since.

You pay National Insurance if you are:

  • 16 or over
  • An employee earning a weekly wage above the minimum threshold
  • Self employed and making a yearly profit above the minimum threshold

Each tax year the minimum thresholds vary, and typically increase. In the tax year ending April 5th 2016, for example, the thresholds were:

  • Employees – £155 a week
  • Self employed – £5,965 a year