All qualifying employees, as well as self-employed individuals, must pay National Insurance. The amount you pay depends on your income and employment status.
It's essential that you pay National Insurance contributions when you earn a qualifying amount. The contributions you pay will help build up your entitlement to your State Pension and other state benefits.
This guide will look at when you can stop paying National Insurance and how your contributions can impact your State Pension and other benefits.
Once you reach the State Pension age, you can stop paying Class 1 and Class 2 National Insurance contributions. This is still the case even if you continue working past the State Pension age. You can also stop paying National Insurance contributions if you stop working because you become a carer or have ill health (even if you're not at State Pension age).
If you pay Class 4 contributions, you will have to continue paying until the end of the tax year that you reach State Pension age. For example, if your birthday is in December, you will have to continue paying National Insurance contributions for a few more months until the end of the tax year (5 April).
Self-employed individuals must continue sending HMRC Self Assessment tax returns for each year they work, even if they are over the State Pension age.
Continue reading to learn more about your National Insurance responsibilities and what you must do once you reach State Pension age.
National Insurance is mandatory for individuals who are over the age of 16 and are:
- employed and earning over £242 per week
- self-employed and make over £11,908 a year in profit
The contributions you make will go towards a government fund that pays for various benefits and pensions. Your employment status and earnings will determine which class for National Insurance contributions you are placed in.
You don't have to make National Insurance contributions if you are over the age of 16 and:
- you are employed and earn £123 and £242 each week
- you are self-employed you make between £6,725 and £11,908 a year in taxable profits
If you fit into either of these categories, you are still eligible for certain benefits and the State Pension.
As soon as you reach State Pension age as an employee, National Insurance Class 1 and Class 2 contributions should automatically stop from your payslip. If you pay Class 4 contributions, they should stop being deducted from your payslip from the start of the new tax year that follows after you reach the State Pension age.
You may have to give your employer proof of your age by showing them a copy of your birth certificate or passport. They should stop your contributions once they have seen either of these documents. If you don't want to show your employer these documents, you can request a letter from HMRC that can act as evidence instead. You may need to send HMRC a copy of your birth certificate or passport if they don't have the information on their records.
You don't have to pay National Insurance contributions on payments you get from pension schemes (including your State Pension). However, you may have to pay Income Tax on the payments if you are still working past the State Pension age.
If you continue working past State Pension age, your employer must still pay Class 1 employer National Insurance contributions. These payments will appear on your payslips, even though you won't have any deductions from your pay.
You only have to pay National Insurance contributions if you are earning the qualifying amount. If you stop working for any reason or you start a new job with a low salary, you don't have to pay National Insurance contributions.
If you start a job that means you earn the qualifying salary, you will have to start paying National Insurance contributions again.
If you don't pay your required contributions, but you earn a qualifying amount, you may get penalised by HMRC. You will get issued a Notice of Penalty Assessment, which must be paid within 30 days. National Insurance is a form of tax and will automatically be deducted from your pay if you are employed. It's your responsibility to pay it if you are self-employed.
There could be gaps in your National Insurance record if you stop paying contributions because you are unable to work. This could affect any benefits that you may claim. To combat the gaps, you may be eligible for National Insurance credits. You can get the credits if you cannot work because you are ill or a carer for someone else.
You may get National Insurance credits automatically, or you will have to apply for them. Class 1 credits count towards your State Pension and other benefits such as New Style Jobseeker’s Allowance. Class 3 credits only count towards your State Pension.
If you are on maternity leave, you will automatically be paid National Insurance credits so that there aren't gaps on your record. You may also be eligible for the credits if you are looking for work and are paid Jobseeker's Allowance or you're on Universal Credit.
In order to fill gaps in your National Insurance record, you may decide or be advised to make voluntary contributions. You might not have enough qualifying years to get the full State Pension if you were unable to work or earned enough to make contributions. By paying voluntary contributions, you can help fill the gaps so that you can get paid the State Pension when you reach the qualifying age.
It's important to note that paying voluntary contributions may mean that you still don't qualify for the full State Pension.
The deadline to make the contributions is 5 April each year. You can usually pay voluntary contributions for the previous six tax years. Depending on your age, you may be able to pay contributions towards gaps that occurred over six years ago.
The rates for voluntary contributions during the tax year 2022/2023 are:
- £3.15 a week for Class 2
- £15.85 a week for Class 3
If you are in the Class 4 category, you can't immediately stop paying National Insurance contributions after you reach State Pension age. Instead, you must continue making the contributions until the beginning of the next tax year (which will begin 6 April). This means that someone born in May will have to pay National Insurance for longer than someone born in March of the same year.
Employed individuals no longer have to pay contributions for National Insurance after they reach State Pension age.
National Insurance contributions are paid into a national pot that the government uses to fund various benefits and State Pensions. The type of class that you are in will determine which benefits your contributions are paid towards.
The table below shows the different state benefits that payments from each National Insurance class contribute to:
|Benefit||Class 1: employees||Class 2: self-employed||Class 3: voluntary contributions|
|Basic State Pension||Yes||Yes||Yes|
|Additional State Pension||Yes||No||No|
|New State Pension||Yes||Yes||Yes|
|New Style Jobseeker’s Allowance||Yes||No||No|
|Contribution-based Employment and Support Allowance||Yes||Yes||Yes|
|Bereavement Support Payment||Yes||Yes||Yes|
If you pay Class 4 contributions but profit below £11,909 each year, your contributions won't count towards benefits.
What is my State Pension age?
Your State Pension age will depend on when you were born and your gender. You can check your State Pension age on the government website. Bear in mind that the age you reach eligibility for your State Pension may vary from when you are eligible to receive your work or private pension.
The State Pension age will change in the future. It is regularly reviewed in order to reflect living expectancy. It is set to rise from 66 to 67 by 2028. After a recent government review, the State Pension age could change again to 68 years between 2037 and 2039. Those that are born before 1970 won't be affected. However, those born between 6 April 1970 and 5 April 1978 may be affected.
You don't have to retire after you reach the State Pension age. Some individuals decide to continue working for some years after they reach it for financial or personal reasons. You will still need to pay Income Tax on your qualifying income, but you won't have to pay National Insurance.
How can I check my National Insurance contributions?
You can check your National Insurance contributions by logging into your online National Insurance record. Your record will show you how much you have paid up to the current tax year. It will also detail how much you have received in National Insurance credits (if applicable). Your National Insurance record won't tell you how much State Pension you are expected to get.
You will need your Government Gateway user ID and password to log into your account. You can create an account on the login page if you don't already have one. Once you have signed up for the 'Check your National Insurance record’ service, you will automatically be registered for a Personal Tax account too.
How do I claim back overpaid National Insurance?
Although it's unusual, you may end up over or underpaying your National Insurance contributions. To claim back money that you have overpaid, you will need to complete the online form on the government website.
If you overpaid Class 1 National Insurance contributions, you should speak to your employer and inform them that you have overpaid. They should be able to adjust your payslip to make up for the overpayments. If your employer cannot do this, you should write to HMRC and claim a refund. Along with your National Insurance number, you must include the following information in your letter:
- Reason why your employer cannot give you the refund
- Reason for overpayment
- Tax year you overpaid in
If you underpaid National Insurance, you should notify your employer so that they can deduct the relevant funds from your next payslip. However, they cannot deduct more than the amount of National Insurance that you owe in a month. This means that you won't be required to pay over double your usual contribution. The remaining balance can be deducted from your payslips in the following months.
You can stop paying National Insurance contributions once you reach State Pension age if you were in Class 1 or Class 2. If you pay Class 4 contributions, you will have to continue paying until the end of the tax year when you reach State Pension age. Self-employed individuals must continue paying National Insurance contributions even after they reach State Pension age.
If you earn less than the qualifying amount or don't work, you won't have to pay National Insurance contributions. However, this may lead to gaps in your National Insurance record unless you receive credits. The credits help prevent gaps and enable you to claim your State Pension and other benefits.