Personal tax and National Insurance contributions

What is personal tax?

Personal tax refers to the taxes you pay directly to the government on your income, savings, and assets. Unlike corporation tax, which applies to a company’s profits, personal tax is based on your individual circumstances.

The main types of personal tax include:

• income tax on your earnings

• capital gains tax (CGT) on profits from selling assets

• inheritance tax (IHT) on the value of an estate

• National Insurance (NI) contributions

What is income tax?

Income tax is the tax you pay on your personal earnings, such as your salary, self-employed profits, or most pensions. You usually only pay this on income that's above your personal allowance. For more information, read Income tax in England and Wales and Income tax in Scotland.

What is CGT?

Capital gains tax is a tax on the profit you make when you sell or ‘dispose of’ an asset that has increased in value, such as shares or a second home. You’re taxed on the gain you make, rather than the total amount of money you receive. For more information, read Capital gains tax.

What is IHT?

Inheritance tax is a tax on the estate of someone who has died, including their property, money, and possessions. Whether tax is due depends on the total value of the estate and to whom the assets are left. For more information, read Inheritance tax.

What is National Insurance?

National Insurance (NI) is a UK-wide tax that must usually be paid for an individual to qualify for the State Pension and certain state benefits, including Jobseeker’s Allowance (JSA) and Employment Support Allowance (ESA).  

Who has to pay National Insurance?

NI must be paid by anyone who is at least 16 and either: 

• an employee who earns over £242 per week from one job, or

• self-employed and making a yearly profit of more than £12,570 

If you are employed, your NI contributions will be paid directly through your employer’s payroll system using your National Insurance Number. Your employer will usually make a matching NI contribution. 

If you are self-employed, you will normally pay your NI contributions using the Self Assessment process. 

How much is National Insurance?

The amount of NI you must pay depends on which NI class you sit in. This is determined based on your employment status and your income.

Some of the key NI classes and rates that individuals within those classes must pay, as of 6 April 2025, are:

• Class 1 (most employees) - for earnings between £242 and £967 per week - 8%

• Class 1 (most employees) - for earnings above £967 per week - 2%

• Class 4 (most self-employed people with earnings above £12,570 per year) - for profits between £12,570 and £50,270 per year - 6%

• Class 4 (most self-employed people with earnings above £12,570 per year) - for profits above £50,270 per year - 2%

Class 2 contributions ended on 5 April 2024 for more self-employed individuals. 

For more detailed information about NI, including more complex rules regarding the different classes, see the government’s guidance on National Insurance.

What is a National Insurance number?

Your National Insurance number (also referred to as your ‘NINO’) is your personal reference number for the UK’s social security system. It stays with you for life and ensures that the National Insurance contributions and taxes you pay are properly recorded against your name. 

How do I find my National Insurance number?

If you have lost or forgotten your National Insurance number, you do not usually need to apply for a new one. You can find it on:

• your payslip or P60

• letters from HMRC or the Department for Work and Pensions (DWP)

• your personal tax account on the government website

• the HMRC app

If you still cannot find it, you can contact the National Insurance helpline or use the government’s online service to find your National Insurance numbers.

How can I get my National Insurance number?

The process for getting a number depends on your age and your residency status:

• UK residents aged 19 or under - you are normally sent a NINO automatically three months before your 16th birthday if a parent or guardian claimed Child Benefit for you

• first-time applicants - if you are over 16 and live in the UK, you must apply for a National Insurance number online. You will usually need to upload photos of your identity documents, such as a passport or residence permit

If you’ve applied for a National Insurance number, you can typically start working before getting your number if you can prove to your employer that you have the right to work in the UK.

What is the difference between PAYE and Self Assessment?

How you pay your personal tax depends on your employment status. These systems are used to collect both your income tax and your National Insurance. Both systems require your national insurance number to ensure the government assigns your payments to the correct record.

What is PAYE?

What is Self Assessment?

If you're self-employed, a landlord, or have levels of income that do not come through PAYE, you must use the Self Assessment system and pay the relevant levels of income tax and NI to HMRC.

This involves:

• registering for Self Assessment with HMRC

• keeping accurate records of your income and expenses

• filing a tax return by the correct deadline each year

• paying your combined tax and NI bill directly to HMRC

Self Assessment tax returns need to be submitted by midnight:

• 31 October for paper returns

• 31 January for online returns

Any income tax you owe on a Self Assessment tax return needs to be paid by midnight on 31 January.

See the government’s guidance on Self Assessments for more information.