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What is National Insurance Contribution?

National Insurance (NI).

If you are independent or self-employed as a sole trader or a partner, you need to pay two types of National Insurance:

Class 2 National Insurance that is firmed at £2.85 per week Class 4 National Insurance on your taxable profits at:

9% on the profits betwixt £8,164 and £45,000 Plus, 2% of any profits over £45,000.

If you are an employee, or a Director of your own Limited Company, there are three types of National Insurance to worry you. The most usual rates, unless you are contracted out of the state pension scheme are:

Employees class 1 National Insurance (paid by you) – First £8,164 per year – nothing Next £36,868 – 12% all above 45,032 – 2%

Employers class 1 National Insurance (paid by your company)–

First £8,164 per year – nothing all above that – 13.8%

There are exemptions for startup businesses in some parts of the country for 12 months for up to 10 employees, capped at £5,000 per employee (for earnings paid up to 5 September 2013).

Class 1A National Insurance (paid by your company) – Paid on the advantage of benefits provided by your company – 13.8%.