What is national insurance in England?

National Insurance (NI) is a system of social insurance in the United Kingdom that provides certain state benefits and services, including the state pension, unemployment benefits, statutory sick pay, and maternity pay. It is paid by employees, employers, and self-employed people.

Employees: Employees pay NI on their earnings above a certain threshold. The amount of NI you pay depends on your level of earnings. There are three main categories of NI: Class 1, Class 2, and Class 4.

* Class 1 NI is paid by employees on their earnings above the Primary Threshold. The current Primary Threshold is £12,570 per year (2022/23 tax year). The rate of Class 1 NI is 12% for earnings between the Primary Threshold and the Upper Earnings Limit, and 2% for earnings above the Upper Earnings Limit. The Upper Earnings Limit is currently £50,270 per year (2022/23 tax year).

* Class 2 NI is paid by self-employed people on their profits above the Small Profits Threshold. The current Small Profits Threshold is £6,725 per year (2022/23 tax year). The rate of Class 2 NI is £3.05 per week (2022/23 tax year).

* Class 4 NI is paid by self-employed people on their profits above the Lower Profits Limit. The current Lower Profits Limit is £9,880 per year (2022/23 tax year). The rate of Class 4 NI is 10.25% for profits between the Lower Profits Limit and the Upper Profits Limit, and 3.25% for profits above the Upper Profits Limit. The Upper Profits Limit is currently £50,270 per year (2022/23 tax year).

Employers: Employers pay NI on the earnings of their employees. The amount of NI that an employer pays depends on the level of their employees' earnings. Employers pay Class 1 NI on the same earnings that their employees pay Class 1 NI on. They also pay Class 1A NI on the value of any benefits they provide to their employees, such as company cars and private health insurance.

Self-employed people: Self-employed people pay Class 2 NI and Class 4 NI on their profits.

National Insurance benefits: The main benefits that are provided through the NI system are:

* State pension: The state pension is a weekly income paid to people who have reached the state pension age. The amount of state pension you receive depends on your NI contributions.

* Unemployment benefits: Unemployment benefits are paid to people who have lost their job and are looking for work. The amount of unemployment benefits you receive depends on your NI contributions.

* Statutory sick pay: Statutory sick pay is paid to people who are unable to work because of illness or injury. The amount of statutory sick pay you receive depends on your NI contributions.

* Maternity pay: Maternity pay is paid to women who are taking time off work to have a baby. The amount of maternity pay you receive depends on your NI contributions.

National Insurance contributions: National Insurance contributions are made up of the amount that employees, employers, and self-employed people pay. These contributions help to fund the National Insurance benefits that are provided by the state.