The post How does National Insurance work? |
MoneyHelper article about insurance this times many people want to
know !! Today, Begin insuranceblog find How does National Insurance
work? | MoneyHelper more this post ! You are watching chủ đề về :
“How does National Insurance work? Đánh giá về How does National
Insurance work? | MoneyHelper
You’ll have to pay National Insurance contributions if you’re over 16 years of age and earn or have self-employed profits over a certain amount. This helps build your entitlement to certain benefits, such as the State Pension and Maternity Allowance.
What’s in this guide
- What is National Insurance?
- When will I pay National Insurance?
- How much is National Insurance?
- Class 1 National Insurance Rates
- Class 2 National Insurance rates
- Voluntary ‘Class 3’ National Insurance rates
- Class 4 National Insurance rates
Watch more videos on the same topic : An Online Shop, Your Way or Bring Your Ideas To Life, with Shopify! (JP-Long)
✅ People also view : nationwide flexplus travel insurance
What is National Insurance?
National Insurance contributions are a tax on earnings and self-employed profits paid by employees, employers and the self-employed. They can help to build your entitlement to certain benefits depending whether you are employed or self-employed, such as the State Pension and Maternity Allowance. Some social security benefits will be dependant on payment of sufficient National Insurance Contributions.
Several factors can determine the level and type of national insurance contribution is payable including:
- employment status
- level of earnings
- residence status.
Back to top
When will I pay National Insurance?
Do you get paid through a Pay As You Earn (PAYE) system? Then National Insurance contributions will be automatically deducted from your salary, so you won’t need to do anything.
It applies to each pay period. Depending on how often you get paid, it could be weekly, monthly, or a different time period.
This means if you earn extra in one month, you’ll pay extra National Insurance. But you won’t be able to claim the extra back, even if your pay is lower during the other months of the tax year.
Are you self-employed? Then your National Insurance contributions will be calculated based on your Self Assessment tax return. They’ll be paid at the same time as Income Tax.
Back to top
Watch more videos on the same topic : National Insurance Changes that YOU Need to Know About! – 2022/2023 Tax Year
Rishi Sunak has made a range of changes to the rates and thresholds for national insurance for the 2022/2023 tax yearnnChanges were made at both the 2021 Budget and 2022 spring statement so in this video, I am going to discuss how all the new NIC changes are going to impact you and your take home pay. National insurance contributions are a sneaky form of taxes so they could impact your take home pay much more than you may first thinknnBe sure to check out these recent videos of mine to learn more about the world of tax:nnhttps://www.youtube.com/playlist?list=PLhpPDH1pmPV4XI25PcD2ewqUvxWQqlQnHnn————————————n– Courses–nFREE Finance Tracker – https://gumroad.com/l/finance-tracker-spreadsheetnFREE Income Tax Template – https://gumroad.com/l/IncomeTaxTemplatenPersonal Tax Masterclass – https://makingtaxsimple.gumroad.com/l/PersonalTaxMasterclassnReal Time Crypto and Stocks Tracker and Guidance – https://gumroad.com/l/CGTandCryptoTaxEssentialsn————————————nSocials:nTwitter – https://twitter.com/MakingTaxSimpl1nInstagram – https://www.instagram.com/makingtaxsimpleuk/n————————————nIf you do have any comments or suggestions about how I could improve the videos or topics that you would like to see me cover then comment those underneath the video and I will get back to you!nnBe sure to:nSubscribe,nLike,nComment,nand Share!nn—————————————nnPlease note that these videos and comments are for education and entertainment purposes only. All information that I provide is believed to be correct but please be aware that there may be inaccuracies.nn#taxation #learnabouttax #financialeducation
✅ People also view : private health insurers
How much is National Insurance?
How much you’ll pay in National Insurance depends on what kind of National Insurance you’re paying.
There are four main classes of National Insurance:
- Class 1 is paid by employees and employers
- Class 2 is paid if you’re self-employed
- Class 3 is a voluntary contribution
- Class 4 is paid if you’re self-employed and have profits over a certain amount
Back to top
Class 1 National Insurance Rates
If you’re an employee you start paying National Insurance when you earn more than £242 a week (2022/23).
The National Insurance rate you pay depends on how much you earn, and is made up of:
- 13.25% of your weekly earnings between £242 and £967 (2022/23)
- 3.25% of your weekly earnings above £967.
The increase to National Insurance rates that took effect in April 2022 will be reversed from 6 November 2022. This will mean the main rate for National Insurance will revert to 12% from 13.25% from 6 November 2022. The increase in National Insurance thresholds this year are not being altered and will remain the same for the 2022/23 tax year.
Additionally, the Health and Social Care Levy that was to be introduced from April 2024 is to be scrapped.
For example, if you earn £1,000 a week, you pay:
- nothing on the first £242
- 13.25% (£102.95) on the next £777
- 3.25% (£1.07) on the next £33.
The rate of National Insurance you pay might be lower if you opted into the Married Women’s Reduced Rate before April 1977. Find out more at GOV.UK
As an employee, your National Insurance contributions stop when you reach State Pension age.
Class 2 National Insurance rates
If you’re self-employed, you might be able to pay Class 2 contributions instead. Class 2 National Insurance contributions are set at a flat-rate weekly contributions of £3.05 a week in 2021-22 (£3.15 a week in 2022-23).
You’ll need to pay them for every week or partial week of self-employment in a tax year. This is if your profits for the entire tax year are £6,515 (the Small Profits Threshold) or more in 2021-22 (£6,725 in 2022-23).
Paying Class 2 contributions is voluntary for self-employed people with profits below the Small Profits Threshold. Paying Class 2 National Insurance contributions, even if your profits are lower, can still help you build contributory entitlements to benefits.
This can be a specialist area but if you use an accountant to do your books or help with your tax return they will be able to give you some guidance on this.
✅ People also view : young driver insurance
Voluntary ‘Class 3’ National Insurance rates
Class 3 voluntary National Insurance contributions are designed to fill in any gaps in your National Insurance record. The aim is to get you a higher State Pension.
To receive the full new State Pension, you’ll need to have at least 35 qualifying years of National Insurance contributions. It’s payable to people who have reached their State Pension age on or after 6 April 2016.
Anyone with less than this will receive a reduced State Pension. To receive the new State Pension you need to have a minimum of ten qualifying years.
If you don’t have enough qualifying years, you might want to pay Class 3 voluntary contributions to boost your pension entitlement.
For 2022-23, Class 3 contributions are payable at a weekly rate of £15.85. This is the maximum rate payable each week. Sometimes they must be paid at the rate for the year in which they are paid instead of the rate for the year for which they are paid. The contributions are collected by HRMC by quarterly demand or monthly direct debit.
You might not always be able to pay Class 3 contributions for a tax year.
That’s why it’s important to find out whether:
- you can make payments towards any gaps
- how much you’ll need to pay
- you will benefit from making any voluntary National Insurance contributions.
Back to top
Class 4 National Insurance rates
If you’re self-employed and make profits of £9,569 or more in 2021-22 (£9,880 in 2022-23), you’ll pay Class 4 National Insurance contributions.
If you’re over this threshold, you’ll pay 9% on profits between £9,559 and £50,270 in 2021-22 (£9,800 and £50,270 in 2022-23).
Back to top
Posts related to