Our National Insurance calculator can help you check if you’re on the right track. Personal Allowance is the amount of money which is a part of your income although is not influenced by any taxing making it completely tax free. Starting on April of 2016, regardless of their age everyone will receive the same amount of Personal Allowance. Unless you are earning over £125,140 then your tax is calculated by simply taking your Personal Allowance amount away from your income. Once your Personal Allowance has been taken away, the remaining amount will be taxed and your Personal Allowance will be left tax free. However, if you earn over £125,140 then you are not granted Personal Allowance.
If you’re a director of a limited company, you may also be your own employee and pay Class 1 National Insurance through your PAYE payroll. Contributions are calculated based on their annual earnings instead of their pay period earnings. As there isn’t a cumulative calculation, you don’t need to check any figures from how to calculate ni prior periods to calculate NI. If you are over 16 and a student and work in a job or have a business with earnings/profits above the threshold then you are liable to pay NI in the regular fashion. Whether you’re employed or self-employed, you’ll likely have to pay National Insurance to qualify for certain state benefits.
- Whether paid weekly or monthly, this tool shows your expected NI contributions.
- And let’s not forget about revenue recognition, whether you recognize revenue when it’s earned or when it’s received, can impact your perceived profitability.
- Class 1A contributions are paid solely by employers on the value of benefits or expenses provided to employees, such as company cars or private medical insurance.
- In the years when it isn’t enough to meet the cost of these benefits, the Treasury makes up the shortfall”.
How to calculate NI
Get matched with your very own accredited accountant who will file your tax return and also give you a one-off tax advice consultation, for less. After four chancellors, three prime ministers and numerous mini and maxi financial budgets, the National Insurance rate changed quite a lot of times. As a result, your calculation isn’t as straightforward as it is in more stable tax years. Consult with a Givver.io to optimize payroll processes and manage costs. While “net income” is commonly used in financial statements, “net profit” is used interchangeably in business discussions to describe the same concept.
From 2025, the EA will increase from £5,000 to £10,000, offering valuable National Insurance savings for SMEs and other eligible employers. Givver is officially recognised by HMRC (HM Revenue & Customs) as a payroll software provider. This recognition means our software has met HMRC’s standards, passed their testing process, and is listed on the official GOV.UK site. We’re committed to upholding the quality and compliance that come with this recognition.
Self-employed workers should tick the relevant box on the self-assessment tax return to claim exemption from Class 4 National Insurance contributions (NICs). When you reach state pension age you no longer have to pay National Insurance contributions, even if you continue working. Employees will stop paying NI contributions as soon as they reach state pension age, which for most people will be 66. If you don’t have to pay National Insurance you might be eligible for National Insurance credits, or you can choose to make voluntary contributions. Both help you build up ‘qualifying years’, which count towards your entitlement for the state pension, and other benefits.
Employee NI Calculator 2025/26
If you earn under the personal allowance £12,570 you are not required to pay NI contributions. If you’re self-employed and fill in a self-assessment tax return, then HMRC will work out how much National Insurance and tax you need to pay. As part of the process, they’ll let you know how much you owe, when it’s due and how to pay. Then, for the earnings between the Primary Threshold (PT) and the Upper Earnings Limit (UEL), which total £952, the employee NI contribution rate is 8%. This results in an employee NI contribution of £76.16 (calculated as £952 × 8%).
How much you pay
That’s the “take-home” cash, the amount you actually get to keep after all the bills are paid. This layout gives you and your stakeholders a clear view of how revenue turns into profit, showing exactly where every expense chips away at the final net income figure. Net income is also referred to as net profit, net earnings, or simply the “bottom line”. We’ll cover what it means, why it matters, where it lives on your income statement, and most importantly, how to calculate it. If you need any more information or if you have any queries regarding National Insurance contributions, please get in touch with us.
Using the calculator
Or speak to our friendly expert advisors who can help explain this further. Be aware that if you occasionally receive a bonus then you might see fluctuations in your total NI payments. Download our guide for expert insights from an accountant, tailored for business owners and the self-employed. Join our community of well-informed business owners and get the latest expert tips on all things tax and business-related.
NI is paid into a government managed fund, and is taken directly from your salary automatically if you are an employee on the PAYE system – (save a few possible exceptions). If you’re self-employed you’ll need to calculate your contributions yourself when you complete your self-assessment tax-return. If you earn less than £242 a week, (or less than £12,570 a year in the current tax year, which runs from 6 April 2022 to 5 April 2023), you won’t pay NI. This is because the threshold at which a person starts paying National Insurance was increased to £12,570 in July 2022. You won’t pay income tax either until you earn more than £12,570 a year.
Our expert team is here to help you with everything from calculating your tax to filing your returns on time. Plus, if you’re eligible for any tax refunds, we’ll help you claim them too. Think of National Insurance as your contribution to the UK’s public services. We do everything for you meaning you don’t need to worry about deadlines, costly mistakes or missed opportunities. If you’re self-employed, you’ll usually need to pay via your self-assessment tax return. This calculator will allow you to check how much in National Insurance contributions an employee needs to pay.
In some cases, such as ‘contribution based’ Jobseeker’s Allowance, the amount you can get, (if you’re eligible to claim), can depend on the amount of national insurance you’ve paid. NI contributions go towards funding a whole raft of payments and benefits. These include the State Pension along with benefits including Jobseeker’s Allowance, Maternity Allowance, Employment and Support Allowance and the Bereavement Support Payment. NI payments currently raise over £142 billion pounds a year for the Government, according to consumer research company Statista. For any profits between £6,725-£9,880 you’ll pay Class 2 National Insurance, which is currently £3.15 a week. For any profits you have over £9,880, Class 4 kicks in, which we explain below.
It doesn’t capture all expenses
- You are only exempt from paying National Insurance in certain situations.
- There is a vast difference in the way National Insurance contributions for employed and the self employed is calculated.
- Leave the hassle to our certified accountants – get your tax return done for just £130+VAT with code 35OFFSA.
- However, if you earn over £125,140 then you are not granted Personal Allowance.
All our accounting packages include free access to Chartered Certified Accountants, so you can make confident business decisions without worrying about extra costs racking up. Leave the hassle to our certified accountants – get your tax return done for just £130+VAT with code 35OFFSA. Our free mileage allowance calculator can help you see in seconds what you could get back. Discover essential tips, strategies, and resources tailored for successfully running a small business in today’s competitive landscape. As you can see from these pages, it can be quite confusing to work out exactly what you need to pay each individual employee. So we recommend familiarising yourself with this information on the HMRC website.
Larger employers, who previously faced an NI liability cap, will now be able to claim the full Employment Allowance, providing significant National Insurance relief. The UK government periodically updates National Insurance rates and thresholds to reflect economic conditions and policy shifts. In April 2025, significant changes will affect employer National Insurance contributions. A strong net income means your business is balancing revenue with expenses and keeping non-operating costs like taxes and interest in check, and making the most of operational spending.
National Insurance contributions are only charged on income from employment or self-employment. This creates a gap in their contributions record, although most will still work for enough years after qualifying to merit a full state pension. You don’t start paying National Insurance until you’re over 16 years old. Students who are older than this are not exempt; if they earn enough, they pay like any other worker.