In this article about the basics of National Insurance in the UK, we take a look at the following:
- What National Insurance is
- Who pays National Insurance and why
- Applying for a National Insurance number
- How much National Insurance you should be paying
What is National Insurance?
National Insurance is a tax which is automatically deducted from employees’ salaries along with their income tax under the PAYE system. Employers also make their own (class 1A/1B) contributions on behalf of each person they employ.
Who pays National Insurance and why?
To pay National Insurance, you must be over 16 and either be an employee earning more than £162 a week, or be self-employed and making an annual profit of more than £6,205. If someone continues working past their State Pension Age, they no longer have to make NI contributions.
For anyone earning £116-£162, their National Insurance record shows that they have been making contributions to protect their NI record. People who have gaps in their employment record can choose to make voluntary (Class 3) contributions. These cost £14.65 per week and can be paid monthly or twice yearly by direct debit.
People who are unable to work because of illness or injury or those classified as carers (for example, looking after the elderly or young children) are entitled to NI credits to protect their future entitlement to a state pension. It is important to ensure that NI contributions are made since their payment makes you eligible for state benefits such as Maternity Benefit, Jobseeker’s Allowance and the State Pension. Without enough contributions, you won’t be able to receive these benefits.
How can I apply for a National Insurance number?
Your National Insurance number, which consists of numbers and letters, is sent to all British citizens just before their 16th birthday.
If you haven’t received yours and are aged 16-19, you should contact the National Insurance helpline to request one. If you’re aged 20 or over, you should contact the NI application phone line. This is also true of anyone moving to the UK who wants to work. They might have to provide other documentation to prove their identity and right to live and work in the country.
How can I find my National Insurance number?
Your NI number can be found on all work-related documents such as your payslip or P60 or any paperwork from official governmental departments such as HMRC or the DWP. If you have misplaced your NI number, you can complete form CA5403 and send it to the address printed on the form. Alternatively, you can contact the NI helpline and answer some questions to verify your identity. You won’t be told your number over the phone. Instead, it will be sent to you by post to arrive within 15 days.
How much National Insurance should I pay?
The amount of National Insurance you pay depends on a number of factors such as your job status, how much you earn and whether you wish to make voluntary contributions. If you are an employee, you pay Class 1 contributions. For the 2018-19 tax year, you pay 12% if you earn £162-£892 a week. For any money you earn over £892, your National Insurance is calculated at 2%.