How To Pay National Insurance When You’re Self-Employed

National Insurance is a key component of the UK’s welfare system. Your National Insurance payments help you qualify for a range of benefits and pensions, including the Basic State Pension, Maternity Allowance, and Bereavement Support Payments.

If you’re a salaried worker in a traditional 9-to-5, your National Insurance contributions (or NICs for short) are calculated by your employer and are automatically deducted from your pay check. But if you’re self-employed, the onus is on you to pay your National Insurance contributions.

How, you ask? Well, you’ve come to the right place.

In this article, we’ll explain how to pay your National Insurance when you’re self-employed, when you need to pay by, and why you might consider making voluntary NICs.

Before we get going, if you need any information on what National Insurance is or which of the four classes of National Insurance you need to pay, check out our ‘Self-Employed National Insurance Explained’ guide for the complete rundown.

How do I make National Insurance contributions?

Whether you’re a sole trader, limited company, or a freelancer, your National Insurance payments are usually made as part of your yearly Self Assessment tax return.

If you haven’t filed one before, Self Assessments are the biggest event on the self-employed accounting calendar; it’s the moment you tell HMRC everything you’ve earned, everything you’ve spent, and everything you need to expense, allowing them to calculate how much tax you need to pay.

You can read all about Self Assessments in our ‘What is a Self Assessment?’ article, which covers the who, what, where, when and why of this all important tax filing.

With all that said, there are a few categories of self-employed people who pay National Insurance a little differently. These include:

• Under 16s, or those above the state pension age (unless you pay Class 4 National Insurance, which you no longer need to pay at the end of the tax year in which you reached the state pension age).
• Fishermen/women and volunteer development workers, for whom a different set of rules apply.
• Married women – but don’t get your hopes up, because we’re only talking about a very specific group of married women. Namely, those who opted into the Reduced Rate scheme before it closed in April 1977 do not have to pay Class 2 National Insurance. 

There are also a few groups of self-employed people who aren’t required to make National Insurance payments through their Self Assessments, but can opt to do so voluntarily. These include:

• Religious ministers, so long as they do not receive a salary or stipend.
• Those who make investments, but do not receive a commission or a fee for doing so, and do not invest as or part of a business.
• Examiners, moderators, and invigilators.
• People whose businesses involve land or property.

Why might you make voluntary National Insurance payments?

The idea of voluntarily dipping into your pocket and handing your hard-earned cash to the tax people might sound crazy, but if you find yourself in any of the four groups we’ve just outlined, there are legitimate reasons to consider it.

Here are a few examples of why you might decide to make voluntary NICs:

• You’re close to State Pension age, but you don’t have enough qualifying years to be eligible for the State Pension.
• You know you won’t be able to get the qualifying years you require during your working life.
• As a self-employed person, you don’t earn enough for HMRC to take Class 2 National Insurance payments from you (the current threshold is £12,570 per annum).
• You live outside the UK, but still wish to qualify for certain benefits by making National Insurance contributions.

How much National Insurance do I have to pay?

That depends.

The amount of National Insurance you’ll need to pay is determined by your yearly profits and the Class of National Insurance you qualify for, so unfortunately, there’s no ‘one size fits all’ answer to this question.

That said, we do offer a take-home pay calculator that can help you get an understanding of how much money you should consider setting aside to settle your tax bill.

You can also check out our ‘Navigating National Insurance’ guide for more information on the four Classes of National Insurance and their various income thresholds.

When do I have to pay National Insurance?

For those making National Insurance contributions through their Self Assessment, you need to make sure your tax return is filed before January 31^st.

Once HMRC have run the rule over your Self Assessment, they’ll let you know how much tax you need to pay – this will include your National Insurance, as well as things like Income Tax.

Once the final amount has been confirmed, we recommend that you pay your tax bill at the nearest possible opportunity.

How can Crunch help me with my National Insurance?

Glad you asked! At Crunch, we believe that self-employment is complicated enough without having to worry about handling your own accounts. That’s why we offer a variety of accountancy packages and tools to simplify the process and give you more time to focus on doing what you love.

As we’ve already mentioned, we offer a number of articles and guides to help you stay up to date with the latest National Insurance thresholds. If you’re managing your own accounts, we recommend bookmarking the thresholds article, which we update the moment the government announce any changes.

If the idea of managing your own tax filing sounds as appealing as a seminar on the history of paperclips, there’s always Crunch’s accountancy packages! Whether you’re a sole trader or a limited company, our accountancy packages include a fleet of in-house accountants that can help you manage your books and even file your Self Assessment on your behalf.

All you need to do is keep a record of your incomings and outgoings, and our experts take care of the rest!

For more information about Crunch’s accountancy packages, check out our Pricing page, or give one of our friendly Sales team a call for a free consultation.