Hoo-rah, folks, I’m back to continue my thrill-and-a-half series on how taxes work in the UK. Yesterday, we went over UK tax rates for individuals; today, we’ll sort through National Insurance rates, which go toward UK social security benefits. Let’s roll.
As an employee, you will pay Class 1 National Insurance (“NI”) contributions:
– 11% of your per-week income if you earn between £110-£844 per week
– 1% of any per-week income you earn above £844 per week
As a self-employed individual, you will pay Class 2 and Class 4 NI contributions:
– £2.40 per week flat (Class 2)
– If you expect to earn less than £5,075 over the tax year, then you may be exempt from paying Class 2 taxes. You’ll need to apply for a “Small Earnings Exception” using form CF10 in this case.
– 8% on taxable profits between £5,715-£43,875 per year (Class 4)
– 1% on taxable profits above £43,875 per year (Class 4)
If you eventually leave the UK, you then might be eligible for an NI tax rebate to reclaim a portion of your contributions.