Once you reach 16 years old and earn above relevant thresholds, you will pay National Insurance contributions on your earnings which qualifies you for a state pension and certain benefits.
Each year that you pay National Insurance contributions is known as a qualifying year. You will receive the full rate of state pension once you have 35 qualifying years, you will receive no state pension if you have less than 10 qualifying years and in between you will receive a proportion. If for example you have 19 qualifying years, then you will receive 19/35 of the full rate.
If you are not working due to illness or because you are caring for someone (including your young children) then you may be able to get credits in order for the year to count as a qualifying year.
You can get a pension forecast at any time which will tell you how many qualifying years you have to date and you can also check your National Insurance record through your gov.uk personal tax account.
Unlike Income Tax which is cumulative, National Insurance is due per source of employment and in any period that meets the threshold. If you have more than once employment, you could potentially have to pay National Insurance contributions on both, neither or either, depending on your income from each source in each pay period.
Different kinds of National Insurance are known as classes and the class of National Insurance you will need to pay depends on your employment status. If you are employed, your employer will also pay Employers National Insurance contributions.
| National Insurance class | Who pays |
|---|---|
| Class 1 | Employees earning more than the current threshold for your pay period and who are under State Pension age – they’re automatically deducted by your employer |
| Class 1A or 1B | Employers pay these directly on their employee’s expenses or benefits |
| Class 2 | Self-employed people earning profits over the current threshold within a year. These will be assessed on your self assessment tax return and payment will be due with your tax liability. |
| Class 3 | Voluntary contributions – you can pay them to fill or avoid gaps in your National Insurance record |
| Class 4 | Self-employed people earning profits over the current threshold within a year. These will be assessed on your self assessment tax return and payment will be due with your tax liability. |