Quick Guide to National Insurance for Contractors

Quick Guide to National Insurance for Contractors

As a contractor, you will either be self-employed or run a limited company

  • National Insurance(NI) needs to be paid by both employed and self-employed
  • The NI amount is the same for people above 16 years of age for women and men
  • You can secure a State pension and Jobseekers Allowance if you pay NI

Self-employed National Insurance

  • Self-employed pay NI through self-assessment tax returns
  • If you make a profit of £6,025 or more a year you will owe NI
  • Class 2 NI at £2.85 a week will need to be paid
  • Class 4 NI at 9% of profits (for profits from £8,164 to £45,000) or 2% on profits over £45,000 will also need to be paid

Limited Company National Insurance

  • As a director, NI will need to be paid if your income is £8,164 or higher
  • Income from a salary or bonus is included as income
  • Any dividends up to £5,000 are tax free and are not included

Contractor Pensions

  • A State pension can be claimed if NI has been paid
  • If you received free NI credits than your state pension will still be secured
  • Free NI credits are given if you are paid between £113 – £157 per week

Making Voluntary NI Contributions

  • Some self-employed groups do not have to pay NI
  • They are: examiners/invigilators; property business owners; religious ministers who are not paid and investors do not get a fee or commission or run such a business
  • A Voluntary contribution to NI is recommended to secure a State pension

Hounslow Office

Quest House
Ground Floor
125-135 Staines Road

London Office

Level 33
25 Canada Square
Canary Wharf
E14 5LB

Phone: 020 3500 0623