National Insurance is charged on earnings from work (unlike income tax, it does not touch savings, dividends or pensions). It comes in classes: Class 1 for employees, Class 4 for the self-employed, and voluntary Class 2 and 3 contributions that plug gaps in your record. Employers pay their own Class 1 at 15% on top of wages.
NI matters twice: as money off your payslip now, and as the qualifying-years record that decides your State Pension later. You need 35 qualifying years for the full new State Pension, and checking your record for gaps is one of the highest-value financial checks most people never make.
An employee on £30,000 pays £1,394.40 of NI a year (8% of the £17,430 above the threshold), while their employer pays £3,750 on top (15% above £5,000). Neither payment touches savings interest, dividends or pension income, which is one reason retirees' tax bills look so different from workers' on the same income.
