UK National Insurance Changes 2025: Class 1, 2, and 4 Contributions

UK National Insurance Landscape in 2025

National Insurance (NI) funds state benefits including pensions and healthcare. Understanding 2025 thresholds and rate changes for Classes 1, 2, and 4 helps employees, freelancers, and directors plan contributions.

Class 1 (Employees)

Employees pay 12% between the Primary Threshold (£12,584) and Upper Earnings Limit (£50,270), then 2% above. Employers contribute 13.8% above the Secondary Threshold (£9,100). Directors may opt for annual or cumulative calculation methods to smooth contributions.

Class 2 and Class 4 (Self-Employed)

Class 2 contributions remain £3.70 per week for profits above £12,570, granting state pension eligibility. Class 4 contributions are 9% between £12,570 and £50,270, then 2% above. Low earners can pay Class 2 voluntarily to protect benefits.

Voluntary Contributions

Individuals with gaps can purchase Class 3 contributions (£17.75 per week) to secure state pension entitlements. HMRC’s transitional arrangements allow filling gaps back to 2006, but deadlines apply.

Integration with PAYE and Self-Assessment

Employees’ NI is collected via payroll, while self-employed NI is calculated during self-assessment. Mixed earners should reconcile contributions to avoid overpaying; HMRC can adjust liabilities when total contributions exceed the annual maximum.

Action: Review NI records in your Personal Tax Account, plan contributions with our UK calculator, and coordinate with accountants for self-assessment filings.