01: Introduction

Employees, employers and self-employed people all have to pay national insurance contributions (NICs). Although NICs are essentially just another tax, paying some classes of NIC may give the person an entitlement to certain social security benefits. In particular, the amount of state pension that you will receive will depend on your NIC record over the whole of your working life (the number of qualifying years needed for a full state pension was reduced to 30 on 6 April 2010).

Employees pay higher NICs but are entitled to a wider range of benefits than self-employed people. In particular, employees qualify for the state second pension, S2P, which is related to earnings.

This briefing gives an overview of NICs and highlights some important issues.Last Updated