Employee NI & National Insurance Calculator

What are National Insurance contributions?

National insurance is a government programme that mandates residents and workers in the United Kingdom to make regular payments toward benefits.

Employees and employers in the United Kingdom pay NICs to fund the NHS, and government benefits programmes such as state pensions. NI contributions are payable through Payroll deductions.

Your job status, income, and whether you have any gaps in your National Insurance determine the type of National Insurance contribution (NIC) you pay. For the tax year 2024-25: 

• if you're over 16 years old and either an employee earning more than £12,570 per year; or
• self-employed and make a profit of £12,570 or more per year, you must pay National Insurance.

What are employee National Insurance contributions?

Employee NICs are deducted from salary and are based on annual earnings.

The employer deposits the same to the HMRC. The employer pays national insurance on top of these earnings to HMRC.

Employees' Class 1 National Insurance

Employees pay 'primary' Class 1 National Insurance contributions. Your employer makes "Secondary" Class 1 National Insurance contributions. Both types of Class 1 NI are collected using the employer's PAYE system.

Employees' Class 1 NI contributions are deducted at 8% (2023-24: 10%) of your pay between the primary limit of £242 per week and the upper earnings limit of £967 per week in 2024-25 and at 2% on income above that.

The single-tier state pension took effect in 2016. As a consequence of abolishing the State second pension, opting out is no longer possible. The Class 1 NI contributions rebate has been eliminated, and all employees, with few exclusions, are responsible for the same rate of Class 1 NICs on income above the primary threshold.

Class 1 NI: Special cases

Directors pay Class 1 NI contributions on their employment income at the same rates as other employees. However, Class 1 NI contributions are based on annual earnings rather than weekly or monthly wages.

As a result, directors who earn inconsistently will contribute the same amount to Class 1 NI if their income were distributed equally throughout the year.

Class 1 NI contributions are due for almost all employees' cash payments. Cash tips received directly from a client or where the employer has no impact over how shared tips are exempt from NI (but are still taxable). Mandatory service charges are not exempt.

How much NIC do I pay?

Employee NICs are only due if your income exceeds the primary threshold.

This threshold is £242 per week or £1,048 per month between 6 April 2024 and 5 April 2025.

The thresholds were the same for the tax year 2023-24.

This is to align the primary limit for Class 1 NIC with the personal allowance for income tax.

The actual amount of Class 1 National Insurance you pay is based on earnings up to the upper earnings threshold, which is £4,189 per month or £967 per week for 2023-24.

The following are the class 1 weekly employee NIC rates for 2024–2025:

The following are the class 1 weekly employee NIC rates for 2023–2024

How to calculate NIC National Insurance for employees?

Understanding how national insurance contributions work could be challenging, especially if you're new to the workplace. Understanding how national insurance contributions operate will help you create a budget and verify that you have paid the appropriate amount.

The best part is that you don't have to make these calculations or computations. Your employer can determine these computations, deduct the amount from your income, and pay it to HMRC.

Regardless of employment status, you are required to pay National Insurance (NI). You are only exempt from paying National Insurance in certain situations.

How does an Employee NIC calculator work?

Employers and employees with an NI number must contribute to national insurance. Their classes pay them at various rates (Class 1, Class 3 or 4). For employee NIC calculations, various brackets and classes are used to calculate how much National Insurance is paid.

• Enter your gross annual salary, which considers any bonuses or overtime pay.
• With a breakdown, our calculator will determine your employee's NICs for the year, month, week, and day.

Do you have to pay NIC for any benefits-in-kind from your job?

Even if benefits and expenses are taxable, employees typically do not pay Class 1 NIC, though certain exceptions exist.

For instance, even though you might have to pay income tax on any benefit, you don't have to pay Class 1 NIC on the cash equivalent of an interest-free or low-interest loan (a "beneficial loan") from your employer.

If the loan is beneficial, your employer may be required to pay Class 1A NIC on the taxable benefit. If your employer waives or writes off the loan, they will subtract Class 1 NIC and income tax from your other earnings through the payroll, depending on the loan's value.

Tax differences between sole traders and limited companies

When deciding sole trader vs limited company, the type and amount of tax you must pay will likely factor into your thinking.

Generally speaking, a sole trader pays income tax on the profits of their company, while a freelancer or contractor who operates through a limited company will pay corporation tax on the company profits and income tax on any wage or dividends received from the business.

What happens if I work multiple jobs?

In addition to paying taxes on second jobs, you may also pay NIC on the second job.

National insurance functions differently from income tax. Each individual has a single amount accessible for each tax-free year. Each work has its threshold for National Insurance purposes as long as it is with a different firm.

Each position is typically assessed separately for NIC purposes unless you occupy the corporate director position. It implies that each employee has the entire lower limit, yet you can pay National Insurance Contributions on each job. If you are uncertain whether your jobs are related, you should seek advice from your supervisor.

What are NIC concerns for part-time workers on a limited income?

If you work part-time and only work a few hours per week, you may deliberately keep your income below the lower earnings limit for NIC so that you do not have to pay any Class 1 NIC.

If you are requested to work longer hours, you may be worried about the impact on your NIC liability.

NIC can 'buy' benefits and pension entitlement.

Suppose you receive less than the lower earnings threshold (£123 a week or £533 a month for 2024/25) for Class 1 National Insurance purposes. In that case, NIC is not due, and your eligibility for contributory benefits or the state pension could be affected.

For state pension purposes, a year only qualifies as an eligible year if you pay sufficient contributions. Income below the lower earnings limit does not generate a qualifying year.

National Insurance (NI) Calculation for Employees and Self-employed?

Both employees and self-employed workers must pay National Insurance contributions (NICs). You acn calculate NIC with experlu national insurance calculator on your gross earnings as an employee or your business profits if self-employed.

Do you pay NICs on expenses and benefits in kind paid by your employer?

Employees pay three of the three types of National Insurance contributions. They are as follows:

• Class 1 NICs - If you are employed, you must pay Class 1 NICs, deducted automatically through PAYE. Class 1 contributions are made on salary, commissions, bonuses, overtime, sick pay, maternity and paternity pay are all computed based on gross earnings over the threshold (before taxes and pension deductions) for that year.
• Class 3 - These are voluntary payments made by those who want to maintain their state pension entitlement but do not make enough earned or self-employed contributions. They can also be payable by persons who are unemployed or work in another country.
• Class 3A - In October 2015, a new form of voluntary contribution was established. This one-time lump sum payment assists persons who reached state pension age on or before April 6, 2016, to transition to the new single-tier state pension.

Company directors are classified as employees and must pay National Insurance on earnings from salaries and bonuses that exceed a specific amount.

Contributions are calculated based on their annual earnings instead of their pay period earnings.

Self-Employed

Self-employed people often pay two types of NI contributions: Class 2 and Class 4:

Class 2 contributions are voluntarily payable to maintain the earner's contribution record if earnings are below the modest profits threshold.

• Class 2 - For 2024/25, Class 2 contributions are abolished (2023-24: payable at £3.45 per week on earnings above the small profits threshold, which is £6,725).
• Class 4 - When a self-employed person's profits reach a specific amount, they must pay Class 4 contributions. Class 4 contributions are now 6% of taxable earnings within up to £50,270, reducing to 2% of profits thereafter.

Employee National Insurance rates

This table shows how much employers deduct from employees’ pay from 6 April 2024 to 5 April 2025.