National Insurance

A UK tax paid by individuals and employers on earnings, funding state benefits including the NHS, state pension, and unemployment support.

Self-employed founders pay Class 2 and Class 4 National Insurance on their profits. These contributions count toward your state pension entitlement and must be included in your tax planning.

As a sole trader earning £35,000 profit: Class 2 NI = £3.45/week (£179/year). Class 4 NI = 9% on profits between £12,570-£50,270. Total NI bill ≈ £2,052 on top of income tax.