National Insurance Explained
National Insurance (NI) is a tax on earnings and self-employed profits paid by employees, employers, and the self-employed. It funds key state benefits including the State Pension, Statutory Sick Pay, Maternity Pay, and the National Health Service. Your NI record — the number of qualifying years you have built up — directly determines your entitlement to the State Pension and other contributory benefits.
The 2024/25 Rate Cut
The main employee NI rate was cut from 10% to 8% in April 2024, following an earlier cut from 12% to 10% in January 2024. This means employees are now paying 4 percentage points less NI than they were in 2023/24, saving a typical employee earning £35,000 approximately £900 per year compared to the pre-January 2024 rates.
Building Your State Pension
You need 35 qualifying years of NI contributions to receive the full new State Pension (£221.20 per week in 2024/25). You need at least 10 qualifying years to receive any State Pension at all. If you have gaps in your NI record — for example due to periods of low earnings, self-employment, or time abroad — you may be able to fill them by making voluntary Class 3 contributions. Check your NI record and State Pension forecast at gov.uk/check-state-pension.