National Insurance in the UK: How Much Are You Paying & What’s It For? 🇬🇧💰| Accountants In Essex

Everyone in the UK has to pay National Insurance (NI), but do you actually know how much you’re paying and why? 🤔 Keep reading to find out!

What is National Insurance & Why Do We Pay It?

National Insurance is a tax that funds essential state benefits and services. Whether you’re employed or self-employed, you must contribute, but the type of NI you pay depends on your employment status.

What Does National Insurance Pay For?

✔️ State Pension – Ensures you receive your pension in retirement.

✔️ NHS Services – Funds free healthcare access. 🏥

✔️ Job Seeker’s Allowance – Provides financial support if you’re unemployed.

✔️ Maternity Allowance – Helps during maternity leave. 🤱

✔️ Statutory Sick Pay – Supports you financially if you’re unable to work due to illness.

National Insurance for the Self-Employed

If you’re self-employed, your National Insurance contributions (NICs) depend on your profits:

📌 Profits over £6,725/year – Class 2 contributions are treated as paid to protect your NI record (so you don’t need to pay them).

📌 Profits over £12,570/year – You must pay Class 4 contributions at the following rates:

• 6% on profits between £12,570 – £50,270

• 2% on profits over £50,270

Why National Insurance Matters | Accountants In Essex

Your National Insurance record determines your eligibility for key state benefits, including your State Pension. Keeping track of your contributions ensures you get the support you're entitled to in the future.

Hopefully, that clears up exactly what National Insurance is & how it works! 💡 If you found this blog useful, leave a thumbs up & share to help others! 👍🔄

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