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