What are National Insurance Contributions (NICs)?

Updated on November 7, 2025

National Insurance Contributions (NICs) are paid by all over 16s in the UK if you are either:

• an employee earning above £12,570 in the tax year; or
• self-employed and making a profit (remember profit is income less expenses, because if you are self-employed, you are running a business) of £6,845 or more a year.

The idea is that you make contributions to gain access to certain government benefits - state pension, job seeker's allowance (now part of universal credit), maternity allowance etc. Therefore, you don't expect to pay National Insurance for any foreign employed work that you have had. It's only relevant for UK income - so you're entitled to UK benefits.

The HMRC website is pretty good these days and talks you through NICs here: https://www.gov.uk/national-insurance. As always, we'll do our best to draw your attention to the bits most relevant for self-employed performers.

What are the different classes?

The class you pay depends on your employment status and how much you earn:

Employed (Class 1 NICs)

Paid by employees earning more than £242/week. This gets taken out automatically from your salary and will appear on your payslip. You pay:

Your pay	Class 1 National Insurance rate
£12,570 to £50,270 for the tax year	8%
Over £50,270 in the tax year	2%

Self-employed (Class 2 and 4 NICs)

You usually pay 2 types of National Insurance if you’re self-employed:

• Class 2 if your profits are below the main NI threshold and you choose to pay voluntarily to protect your National Insurance record (the voluntary rate is £3.50/week for 2025/26); and
• Class 4 if your profits are £12,570 or more a year.

A useful way to think about it:

• If your profits are below £6,845 → You can choose to pay Class 2 voluntarily if you want to keep your NI record topped up.
• If your profits are between £6,845 and £12,570 → HMRC currently treats your Class 2 as covered (you get the NI credit automatically, without paying).
• If your profits are over £12,570 → You’ll pay Class 4 automatically through your tax return.

Class	Rate for tax year 2025 to 2026
Class 2	Voluntary: £3.50/week (if you choose to pay)
Class 4	6% on profits between £12,570 and £50,270 2% on profits over £50,270

What if I do employed and self-employed work?

Unfortunately, you have to pay both if you do both. However, this is only true if you make the different earning thresholds - so it's a good thing really!

This all seems a bit complicated doesn't it?

We know! But the good thing is, you don't need to know any of this. It is all calculated automatically in your self-assessment tax return, which we walk you through in our Tax Return article. You pay your self-employed national insurance bill in exactly the same way as you pay your tax bill. It's all part of the self-assessment process.

We have had a couple of people ask us why they are paying NICs when they haven't earned enough money in a year, so we want to show you the bit of the tax return that catches some people out. On the below screen, HMRC calculates a Class 2 NICs value regardless of whether you have made enough money. Then at the bottom of the screen, it asks you if you want to pay voluntarily. You can select 'No' and you won't be charged.

How do I pay?

You pay your national insurance bill in exactly the same way as you do for your self-employed tax bill - in fact you can add it together and do it at the same time. The deadline is the same as your self-assessment tax bill deadline (midnight 31st January). You can pay your tax and national insurance bill at any time throughout the year once the tax year in question has finished (post 5th April) which gives you up to 10 months runway.

Knowing what your tax and national insurance bills are looking like throughout the year is going to help you avoid any surprises and plan ahead. The SansDrama Web App includes this amongst other performer-friendly features and is how we fund this glorious fact-filled website, so please check it out!

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