How does National Insurance work if I am self-employed and employed?

If you are both employed and self-employed, you need to ensure you tell HMRC the correct figures.

You are charged Class 1 NICs on any amounts earned through employment exceeding £792 per month. This is charged at 12% for amounts between £792 and £4,167 per month, and 2% for amounts over £4,167 per month. This will be automatically deducted from your gross salary each month.

In self-employment, you are charged Class 2 NICs for profits exceeding £6,475 per year, PLUS Class 4 NICs on profits exceeding £9,500. Class 2 NICs is charged at £3.05 per week of self employment (so it is important you tell HMRC if/when you start/end any self employment in a tax year). Class 4 NICs is charged at 9% on profits between £9,501 and £50,000, and at 2% on profits over £50,000.

When you complete your self assessment tax return, if you have both employment and self-employment, you will need to enter your earnings through employment that are above the Primary Threshold (PT) and up to and including the Upper Earnings Limit (UEL) – this figure is available in Column 4 of your P60 that you receive from your employer each year before the 31st May. This will then adjust your Class 4 NICs contribution if applicable.

(Figures and thresholds are relevant to the 2020-2021 tax year)