What is national insurance and who pays it?
Answered 11 March 2026
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What is National Insurance and Who Pays It?
What the law says
National Insurance contributions (NICs) are governed primarily by the Social Security Contributions and Benefits Act 1992 (SSCBA 1992). The law establishes several distinct classes of contribution, each applying to different categories of person.
HMRC guidance / practice
What is National Insurance?
Most people between the age of 16 and State Pension age pay contributions into the National Insurance scheme. These contributions enable individuals to claim National Insurance benefits, such as the State Pension.
Who pays — the classes of NICs:
NICs are divided into the following classes:
| Class | Who pays | Basis |
|---|---|---|
| Class 1 (Primary) | Employees | On earnings from employment, collected via PAYE |
| Class 1 (Secondary) | Employers | On earnings from employment, collected via PAYE |
| Class 1A | Employers (and some third parties) | On most taxable benefits in kind provided to employees |
| Class 1B | Employers | As part of a PAYE Settlement Agreement (PSA) with HMRC |
| Class 2 | Self-employed individuals | A flat-rate contribution |
| Class 3 | Individuals (voluntary) | To preserve or enhance entitlement to certain benefits, such as the basic State Pension |
| Class 4 | Self-employed individuals | Based on a percentage of profits between a lower and upper limit, normally in addition to Class 2 |
How Class 1 is collected:
Class 1 NICs consist of two parts — the primary (employee's) share and the secondary (employer's) share. An employer is entitled to deduct Class 1 NICs from an employee and is responsible for paying both parts to HMRC. Most people have a secondary contributor (usually the employer) who is responsible for the deduction of primary NICs from their wages, and the employer pays both PAYE Income Tax and NI to HMRC under a single PAYE reference.
Class 4 NICs are collected with income tax through Self Assessment.
Citation sources
The DAA1(A) should be issued to the person who considers they paid National Insurance contributions (NIC) in error. In the case of Classes 2 and 3 NIC, only one person needs to be named. Such decisions cannot be issued about Class 4 NICs as Class 4 NICs are collected with income tax through Self Assessment. Where a person considers they have paid NICs in error and the dispute is about whether Classes 1, 1A or 1B NICs are due or the amount of NICs payable, do not issue a decision about whether NI
Most people between 16 and the State Pension age pay contributions into the National Insurance scheme. These contributions enable individuals to claim National Insurance benefits, such as the State Pension. There’s a brief summary of the classes of National Insurance contributions at NIM00002 in the National Insurance Manual.
Class 1 National Insurance consists of two parts Primary - the employee’s share Secondary - the employer’s share An employer is entitled to deduct Class 1 National Insurance contributions (NIC) from an employee and is responsible for paying both parts to HMRC. Most people have a secondary contributor (usually the employer) who is responsible for the deduction of primary NICs from their wages. It is therefore the employer, or an agent acting on behalf of the employer, who registers for a PAYE sch
Some content of this manual is being considered for archiving. If there is content you use regularly, please email hmrcmanualsteam@hmrc.gov.uk to let us know as soon as possible. National Insurance Contributions are divided into classes: Class 1 payable by employers (secondary class 1 contributions) and employees (primary class 1 contributions) on earnings from employment and usually collected alongside PAYE. Class 1A payable only by employers and some third parties on most taxable benefits prov