Do I Pay National Insurance if I Am Employed and Selfemployed

If you’re both employed and self-employed, you need to pay National Insurance (NI) on both your income sources. As an employee, your NI contributions are deducted from your salary or wages by your employer, while as a self-employed person, you’re responsible for paying your own NI contributions through your Self-Assessment tax return. The amount of NI you pay depends on your earnings from both sources, and you’ll need to consider Class 1 NI for your employment income and Class 2 or Class 4 NI for your self-employment income. Make sure you keep track of your income and expenses to ensure you’re paying the correct amount of NI and avoiding any potential penalties.

Combined Earnings and Contributions

If you are employed and self-employed, National Insurance contributions are based on your combined earnings from both sources. Once your combined earnings reach a certain threshold, known as the “Primary Threshold”, you will pay Class 1 National Insurance on your earnings from both employments. The Primary Threshold for 2023/24 is £12,570.

The table below shows the different National Insurance rates and thresholds for 2023/24:

Contribution typeEarnings thresholdRate
Class 1£12,570 – £50,27013.25%
Class 1Over £50,2703.25%
Class 4 (self-employed)£12,570 – £50,27010.25%
Class 4 (self-employed)Over £50,2702.55%

For example, if you earn £20,000 from employment and £10,000 from self-employment, your combined earnings are £30,000. This means you will pay Class 1 National Insurance on your employment earnings of £20,000 and Class 4 National Insurance on your self-employment earnings of £10,000.

National Insurance Thresholds

National Insurance is a tax that employees and self-employed workers pay towards the funding of the UK state pension and other benefits. It is payable on earnings above a certain threshold which are as follows:

  • 2022-23 tax year: £9,880
  • 2023-24 tax year: £12,570

    For employees, National Insurance is deducted from wages and salaries before tax. For self-employed workers, it must be paid separately. There are different rates of National Insurance for employees and the self-employed.

    Employees

    IncomeEmployee National Insurance Rate
    £0-£9,8800%
    £9,881-£50,27013.25%
    £50,271-£150,0003.25%

    In addition, employees also pay 1.25% for Social Care Levy on incomes over £9,880.

    Self-Employed

    IncomeClass 2 National Insurance RateClass 4 National Insurance Rate
    £0-£9,880£3.15 per week0%
    From £9,881£3.15 per week9% on profits between £9,881-£50,270
    2% on profits over £50,270

    National Insurance Contributions for Employed and Self-Employed Individuals

    Individuals who earn income from employment or self-employment may be required to pay National Insurance (NI) contributions. The amount of NI you pay depends on your employment status and the level of your earnings.

    Class 1 Contributions

    • Paid by employees on their earnings above the Primary Threshold (PT).
    • Deducted from your salary by your employer.
    • Rates vary depending on your age and income.

    Class 4 Contributions

    • Paid by self-employed individuals on their annual profits above the Small Profits Threshold (SPT).
    • Due by 31st January each year.
    • Rates are fixed and depend on your level of profits.

    The table below summarizes the key differences between Class 1 and Class 4 NI contributions:

    TypePaid byIncome thresholdDue dateRates
    Class 1EmployeesPrimary ThresholdDeducted monthlyVaries
    Class 4Self-employedSmall Profits Threshold31st January annuallyFixed

    Tax Relief and Deductions

    If you are employed and self-employed, you may be eligible for certain tax reliefs and deductions that can reduce your National Insurance contributions.

    Tax Reliefs

    • Personal allowance: This is a tax-free allowance that you can earn before you start paying income tax. The personal allowance for 2022/23 is £12,570.
    • Trading allowance: This is a tax relief of up to £1,000 that you can claim if you are self-employed and your trading profits are less than £10,000.

    Deductions

    • Business expenses: You can deduct the cost of any expenses that you incur in the course of your self-employment from your trading profits. This includes things like the cost of equipment, supplies, travel, and marketing.
    • Capital allowances: You can also claim capital allowances for the cost of certain assets that you use in your business, such as computers and equipment.
    Type of Relief/DeductionAmount
    Personal allowance£12,570
    Trading allowanceUp to £1,000
    Business expensesVaries
    Capital allowancesVaries

    Cheers for reading, folks! I hope this helped clear up any confusion surrounding National Insurance for the employed and self-employed. Remember, the rules can be a bit tricky, so if you’re still unsure about how much you should be paying, don’t hesitate to reach out to HMRC or a tax professional. Thanks again for stopping by, and be sure to visit us again soon for more money-related info and banter. Until next time!