#Tax Myth 5 - You have to pay national insurance to earn a state pension

Employees who earn at least £107 per week or £464 per month for a full tax year will be achieving a credit towards the 30 years they need in order to earn a basic state pension.

At these earnings there is no national insurance to pay by you or your employer. Your employer may be your own company.

Therefore, you aren't paying anything to earn a state pension.

Earnings up to £144 per week or £624 per month, continue to be free of national insurance. In addition you benefit from a further top up to the basic state pension, called the  S2P. You are deemed to be earning a higher salary but for no cost to yourself or your company.

Therefore, you or your employer aren't paying national insurance and you are earning more than a state pension.

If you are a sole trader, you build up a state pension from paying Class 2 National Insurance of £2.65 per week. A low contribution but not free as for the employees described above.

You don't receive any benefits from paying Class 4 National Insurance of 9% on your profits. This is odd bearing in mind that this is by far the most expensive National Insurance element if you are a profitable self employed business.

If you are near retirement age, transitional provisions may apply, but the general points made above are still likely to remain valid.