Gaps in your National Insurance record
You may get gaps in your record if you do not pay National Insurance or do not get National Insurance credits. This could be because you were:
- employed but had low earnings
- unemployed and were not claiming benefits
- self-employed but did not pay contributions because of small profits
- living or working outside the UK
Gaps can mean you will not have enough years of National Insurance contributions to either:
You may be able to pay voluntary contributions to fill any gaps if you’re eligible. You can check your National Insurance Contributions status here
Decide if you want to pay voluntary contributions
Voluntary contributions do not always increase your State Pension. Contact the Future Pension Centre to find out if you’ll benefit from voluntary contributions.
You may also want to get financial advice before you decide to make voluntary contributions.
You need to tell HM Revenue and Customs (HMRC) when one of your employees leaves or retires, and deduct and pay the right tax and National Insurance.
You must give your employee a P45 when they leave.
Paying an employee after giving them a P45
If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):
- use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
- deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal – but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, treat it as a weekly payment
- report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
- give the employee written confirmation of the payment showing the gross amount and deductions
- add the additional payment in the ‘Year to date’ field if the payment is in the same tax year
The payment should be the only one in the ‘Year to date’ field if it’s being paid in the next tax year.
You must not give the employee another P45
You pay mandatory National Insurance if you’re 16 or over and are either:
- an employee earning above £184 a week
- self-employed and making a profit of £6,515 or more a year
The amount of National Insurance you pay depends on your employment status and how much you earn.
If you’re employed
You pay Class 1 National Insurance contributions. The rates for most people for the 2021 to 2022 tax year are:
||Class 1 National Insurance rate
|£184 to £967 a week (£797 to £4,189 a month)
|Over £967 a week (£4,189 a month)
National Insurance increase from April 2022
From 6 April 2022 to 5 April 2023 National Insurance contributions will increase by 1.25%. This will be spent on the NHS and social care in the UK.
The increase will apply to:
- Class 1 (paid by employees)
- Class 4 (paid by self-employed)
- secondary Class 1, 1A and 1B (paid by employers)
The increase will not apply if you are over the State Pension age.
You can find more details here