National Insurance explained

Employees pay Class 1 contributions, deducted from pay above a threshold and shown separately from income tax on the payslip. The employer pays a further, larger contribution on top, which never appears in your take-home but is a real cost of employing you.

The self-employed pay Class 4 contributions on profits through Self Assessment, and Class 2 arrangements have changed in recent years — check the current position, because Class 2 historically determined the qualifying year for people with low profits.

Class 3 is voluntary and exists solely to fill gaps in your contribution record.

The structure is not straightforwardly progressive: contributions apply between a lower and upper threshold at the main rate, and above the upper threshold at a much lower rate. This is why the combined income tax and NI burden does not rise smoothly with income.

You stop paying employee National Insurance once you reach State Pension age, even if you keep working. Your employer continues to pay theirs. Many people work past State Pension age without realising they should have stopped being charged, so it is worth checking the payslip.

Rates and thresholds change with each fiscal event and take effect from 6 April, which is why this page quotes none of them. GOV.UK carries the current figures.

A qualifying year is a tax year in which you paid or were credited with enough National Insurance. Crucially, it is about whether you crossed the threshold, not how much you paid — someone on a high salary and someone just above the threshold both earn one qualifying year.

The new State Pension generally requires 35 qualifying years for the full amount, and at least 10 for any State Pension at all. Between 10 and 35 you get a proportion.

People who were in the system before April 2016 have a 'starting amount' calculated under transitional rules, which can be higher or lower than the simple year count suggests — particularly if you were ever contracted out of the additional State Pension through a workplace scheme. This is why the forecast, rather than the arithmetic, is the number to rely on.

National Insurance credits fill years without contributions in defined circumstances: while claiming Child Benefit for a child under 12, while receiving certain benefits, while caring for someone, while on jury service, and in several other situations.

The Child Benefit credit is the one that catches people out most. A parent who opted out of receiving Child Benefit payments because of the High Income Child Benefit Charge, without registering a claim, can lose years of credits. Registering a claim and electing not to receive payment preserves the credits — and this can be corrected retrospectively in some circumstances, which is worth investigating if it applies.

Specified Adult Childcare credits let a grandparent or other family member who cares for a child under 12 receive the credit the working parent does not need. Take-up is very low relative to eligibility.

Check your record through your personal tax account on GOV.UK. It shows every tax year, whether it was a full year, and what any shortfall would cost to fill.

Get a State Pension forecast at the same time. It tells you what you are on course for, what the maximum you can reach is, and by when — which is more useful than the record alone because of the transitional rules.

Where there are gaps, voluntary Class 3 contributions can fill them, and the self-employed may be able to use Class 2. There are ordinarily time limits on how far back you can go, and those limits have been extended and then re-tightened in recent years — check the current deadline before assuming a year is still fillable.

Do not pay to fill a gap without checking whether it will actually increase your pension. Because of the transitional starting amount, some years genuinely add nothing. The Future Pension Centre exists specifically to answer this, and calling them before paying is the single most useful step in the whole process.

Where a gap arose because credits were not applied — Child Benefit not claimed, carer's credits not registered — apply for the credits rather than paying for the year. Credits are free and payment is not.

If you have worked abroad, contributions in some countries may count towards UK entitlement under reciprocal agreements, and UK contributions may count towards theirs. This is worth investigating rather than assuming years abroad are simply lost.

The State Pension is the main entitlement, and the only one most people ever draw on.

Contribution-based benefits also depend on the record: contribution-based Employment and Support Allowance, and New Style Jobseeker's Allowance, both require recent contributions rather than lifetime years, which is why someone with a long record but recent self-employment may not qualify.

Maternity Allowance, bereavement support and some other payments have their own contribution conditions.

The NHS is funded from general taxation rather than from National Insurance specifically, despite the widespread belief otherwise — NHS access depends on ordinary residence, not on a contribution record.

You need a National Insurance number to work legally in the UK and to be paid correctly, and it is used to link your record across employers.

Keep your number safe. It is used in identity fraud, and no legitimate organisation will ever phone or text asking you to confirm it or warning that it has been 'compromised' — that is a well-established scam script.

If you think you have paid too much — commonly through having two jobs, or continuing to pay past State Pension age — you can claim a refund from HMRC.