When May A Voluntary NI Contribution Be Beneficial?
2025/26 NI Rates are used in this guide.
Entitlement to State Benefits, primarily State Pension, is currently generated from either:
- Employees – including Company Directors – Class 1 National Insurance from an Employment / Job – confusingly, no NI is due on weekly earnings of less than £125, and NI is payable at 8.0% on weekly earnings over £242 – between these thresholds you get a NI credit (effectively you pay NI at 0%), meaning the threshold for benefit entitlement is £125 a week even if there is no actual NI deduction from your payslip. However you must earn at least £125/week (or £542/month) for a pay period to qualify.
- Self employed – Class 2 National Insurance from Self Employment – this has changed from 2025/26 onward:
- If your business profits are over £6,845 you get an automatic credit for Class 2 NI but make no payment
- If your business profits are under £6,845 you get no credit. But you can pay voluntary NI at £3.50 / week (collected as an annual payment, via Self Assessment) to protect state pension and benefit rights.
- NI credit as a carer or parent – see see HMRCs guide to Voluntary NI
Voluntary NI
If you don’t pay National Insurance or get a credit from one of the sources above for each week/month, then a voluntary NI payment may be sensible, for example if:
- If you are Self Employed – including being a partner in a Partnership – but earning less than the £6,845 threshold, then the easiest and cheapest solution is to pay a voluntary Class 2 contribution – £3.50 week. This is paid annually via Self Assessment.
- If you are not Self Employed then you would need to pay voluntary Class 3 contributions which are more expensive – £17.75 week.
Generally consider Voluntary NI if in any given tax year you do not have qualifying earnings from employment of at least £6,500 from Employment (52 x Lower Earnings Limit of £125), or £6,845 from Self Employment.
- Only weeks where you earn over £125/week (or £542/month if monthly paid) count as qualifying earnings from employment
- However weeks or months where you earn over this threshold count towards the annual qualifier of £6,500
- This means if you have an employment paying just over the threshold you need it for 52 weeks or 12 months, but if you have an employment paying well over the weekly/monthly threshold then a few weeks r months will get you the annual credit. This is relevant if you leave an employment during the tax year.
It is worth getting a State Pension forecast periodically from HMRC to see how many more years you need to pay for a full pension – whilst there is no exemption from paying NI once you have accrued a full pension, there is no real merit in making voluntary contributions at this stage.
If you need to pay Voluntary Class 2 NI then you can do so by ticking the relevant box on the Self Employed section of your Self Assessment, however you must pay the Class 2 by 31 January after the tax year (the normal Self Assessment payment date) – if you pay late, even by a day, then you lose the right to pay voluntary Class 2 NI.
Employed and Self Employed? NI Considerations
What about if you have both Employed and Self Employed income?
First, it is important you pay National Insurance on one or other source to preserve benefit rights, and in particular State Pension.
Second you can get a full years NI contribution from either:
- Qualifying earnings from employment are over £6,500 over the course of a tax year; or
- Self Employed profit over £6,845
Third, if you don’t get a full years contribution from either of the above then consider paying, via your Self Assessment, a Voluntary NI Class 2 payment.
There is an annual maximum for National Insurance if you pay at full rate in an Employment and have an additional second Employment or Self Employment but it is extremely complex.
The Self Employed pay both Class 2 and Class 4 NI. Class 4 is a variable percentage. All State Benefits are triggered from Class 2.
- Class 2 – Credit given if profits over £6,845, but no payment to make.
- Class 4 – 6% on profits between £12,570 and 50,270. 2% on profits over £50,270.
If you have both employment and a self employment with profits over £12,570 then you will be paying NI on both sources (Class 1 and class 4).