If you work you are most likely at least partially aware of national insurance, but it is in your best interests to understand how it works so you can be sure you aren’t overpaying. We will cover everything you need to know about national insurance for 2023/24 in this article.
Do you need help getting your national insurance affairs in order? Speak to a trusted financial advisor today and get on top of your finances.
What is the national insurance rate for 2023?
The national insurance rates for 2023 -2024 are:
- 12% for £242 to £967 a week (£1,048 to £4,189 a month) of your pay.
- 2% for over £967 a week (£4,189 a month) of your pay.
- If you are employed and self-employed, your employer will deduct your Class 1 National Insurance from your wages, and you may have to pay Class 2 and 4 National Insurance for your self-employed work. The amount will be dependent on the combined wages.
How much national insurance will I pay in 2023?
Your employment status and how much you earn dictates how much national insurance you will pay. If you are employed, you pay Class 1 National Insurance contributions. You will pay less if you are a married woman or widow with a valid ‘certificate of election’ or if you are deferring National Insurance because you’ve got more than one job.
If you’re self-employed you pay Class 2 and Class 4 National Insurance, depending on your profits. Most people do this through self assessment and you should be aware that there can be severe fines for missing the deadline .
You may be able to pay voluntary contributions to avoid gaps in your National Insurance record if you have profits of less than £6,725 a year from your self-employment. Or, if you have a specific job (such as an examiner or business owner in property or land) and you do not pay Class 2 National Insurance through Self-Assessment. You can apply to HMRC to check your National Insurance record and claim a refund if you think you’ve overpaid.
Check whether you are entitled to a state pension boost
You could be entitled to an urgent state pension boost but it is only possible to claim until the 31st of July. To be eligible you will need to be aged between 45 and 70, as you need around 35 qualifying years. You will also need to check whether you are missing any years before the deadline to qualify for the pension boost. You might have missing years because of a career break, caring for someone, years spent abroad, or low income etc.
You can check if you are eligible by looking up your state pension summary. Fill in your details and you will be told whether your pension is predicted to be at the full state pension level. Then check your National Insurance record. Look for a year that is not full or check if you haven’t contributed since 2006.
You might be due free national insurance credits if you had child care or caring responsibilities, or if you were ill for an extended period of time. You can also buy more years if you need them. It is £800 for a full voluntary national insurance year, which adds £275 a year to your state pension. Meaning you just have to live three more years after the state pension age to reap the rewards.
Make sure to contact the Government’s Future Pension Centre BEFORE paying for any missing years. Each case is different, so it is important to get advice on your unique situation. Before making any decisions, you can get help and advice from the Future Pension Centre. You need to be careful paying for missing years, as it might reduce the amount of pension credit you are entitled to. This could result in you being pushed into a higher tax bracket, meaning the returns will not be as you planned. So be sure to check if it is worth filling the gaps by paying for missing years as it might not be worth it for you specifically.
The state retirement age is only going up
It has been reported that in the future governments may have to choose between:
- raising the state pension age to 74 for current 30-year-olds.
- Decreasing the triple lock.
- Increasing Britain’s state pension payments to detrimental levels.
The research shows that there are recommendations to increase the state pension age to 69 by 2046 – 2048 which would impact those aged 45 or younger, as they would miss out on three years of state pension. Those aged below 31 may also be hit by a potential state pension age increase, potentially going up to 74 years by 2065-67.
With the retirement age going nowhere but up in the coming years, you’ll want to put yourself in the best possible position to make the most of your pension when you get it. If you’d like some help getting on top of your finances, get in touch with an experienced financial advisor today.