National Insurance contributions explained

My friend Barney was filing his self-assessment tax return. He used to be employed and now he is self-employed so tax returns are new to him. Barney had estimated his income tax had money put aside to pay the tax due and was almost finished with his return when he called me in a panic. ‘It’s more than I thought. Much more. What have I done wrong?’

I go through his estimate and go through the final return. ‘You forgot to include any National Insurance contributions ’ I said. Silence on the other end of the phone. ‘It’s easy to do focus on the tax and forget the National Insurance contributions or NICs as they are known.’

Barney said: ‘I never did understand NICs not even when I was employed. Can you please explain them to me?’

So there...