National Insurance calculator

You pay 8% on earnings between the primary threshold and the upper earnings limit, and 2% on earnings above it. Between the lower earnings limit and the primary threshold you pay nothing, yet the year still counts towards your State Pension. If you are paid every 4 weeks, payroll uses thresholds of £967 and £3,867.

Income tax is cumulative, so over the year a quiet month and a busy month even out. National Insurance looks at each payday on its own, against that pay period's thresholds. On £35,000 paid monthly, each payday is £2,916.67. Payroll charges 8% on the £1,868.67 above £1,048, which is £149.49.

That has two effects. A month with pay below £1,048 pays no NI, and the unused part of the threshold is lost. A month with pay above £4,189 pays only 2% on the excess, so uneven pay can mean less NI over a year than the same total paid evenly. Nothing is carried from one payday to the next, so overtime, a pay rise or unpaid leave changes your NI straight away.

A bonus is added to that month's pay and charged on the same per-payday basis. On a £36,000 salary a normal month pays £156.16. In the month a £10,000 bonus is paid, gross pay is £13,000: 8% on the £3,141 between £1,048 and £4,189 is £251.28, and 2% on the £8,811 above is £176.22, a total of £427.50.

Over the year that comes to £2,145.26, against £2,673.96 if the same £46,000 were paid evenly. Income tax on a bonus works differently, and the bonus tax calculator shows the whole picture.

Employees stop paying Class 1 National Insurance once they reach State Pension age, even if they carry on working. Show your employer proof of your age, such as a passport or birth certificate, and payroll will move you to category letter C. Income tax carries on as normal, and your employer still pays 15% employer NI on your earnings. If you are self-employed, Class 4 stops from the 6 April after you reach State Pension age.

Your payslip shows a category letter that tells payroll which rates to use. Most employees are on A. Employees under 21 (M) and apprentices under 25 (H) pay the same as A, while their employer pays no NI on their earnings up to £50,270 a year. Category J applies when you can defer NI because you already pay it in another job: that job takes 2% on earnings above the primary threshold. A small number of married women and widows with an old election certificate are on B and pay a reduced rate.

Directors have an annual earnings period, so their National Insurance is worked out on total earnings for the tax year. That stops a director avoiding NI by taking all their pay in one large month. Many payrolls take NI on account each payday and settle the correct total at the end of the year, so a director's payslips can differ from the per-payday figures here. A director paid between £6,708 and £12,570 a year pays no employee NI and still builds a State Pension qualifying year. HMRC's CA44 guide sets out the methods.

Self-employed profits pay Class 4 National Insurance through Self Assessment: 6% on profits between £12,570 and £50,270 and 2% above. With profits of at least £7,105 you get a State Pension qualifying year without paying Class 2. Below that you can pay voluntary Class 2 of £3.65 a week. Work it out with the self-employed tax calculator.