UK income tax

The UK income tax system: National Insurance

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You pay National Insurance contributions (NICs) to build up your entitlement to certain social security benefits, including the State Pension.

If you're living and working in the UK, the type and level of NIC you pay depends on how much you earn and whether you're employed or self employed. You stop paying NICs in the year you reach State Pension age.

Who pays National Insurance?

You pay NICs if you are an employee or self-employed and you are aged 16 and over, providing your earnings are more than a certain level. You stop paying NICs at State Retirement age. This is currently 65 for men and 60 for women but will gradually increase to 65 for women over the period 2010 to 2020.

Your National Insurance number
Your National Insurance number (NI number) is your own personal account number. The number ensures that the National Insurance contributions and the tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.

Who uses your NI number?
The only people you should ever give your NI number to are:

  • HM Revenue & Customs (HMRC)
  • your employer
  • Jobcentre Plus, if you claim Jobseeker's Allowance
  • your local council, if you claim Housing Benefit.

 

Entitlement to many benefits depends on your National Insurance contribution record (see 'Benefits that depend on NICs' below) so it's very important not to give your number to anyone else.

You will also be required to provide your NI number if you open an Individual Savings Account (ISA).

How to get an NI number
If you don't already have a NI number you must apply for one:

  • as soon as you start work
  • as soon as you or your partner claims benefit.

 

To be able to apply you must be:

  • over 16 years of age
  • resident in Great Britain (England, Wales or Scotland).

 

If you are a parent or guardian and receiving Child Benefit, any children you care for will automatically get a card showing their NI number just before they reach the age of 16.

To apply for a NI number you will need to telephone the Jobcentre plus NI allocation service helpline on 0845 600 0643. They will make sure you need a number and arrange for you to undertake an evidence of identity interview.

Evidence of identity interview
The interview will usually be one-to-one (unless, for example, you need an interpreter). The interviewer will ask you questions about your background and circumstances.

The interviewer may also ask you to fill in an application form.

If you don’t have any official documents
If you haven't got any official documents you still have to go to the interview. You might be able to prove your identity with the information you give at the interview.

National Insurance rates
Check current NIC rates on the HMRC website.

Benefits that depend on NI contributions
Your entitlement to the following benefits and/or the amount you can get will depend on your (or in some cases your spouse or civil partner's) NIC contributions:

  • Contribution based Jobseeker's Allowance (Class 1 NICs only)
  • Incapacity Benefit (if you can't work for long periods due to illness or injury)
  • Contribution based Employment and Support Allowance (ESA)
  • State Pension
  • additional State Pension (Class 1 NICs only)
  • Widowed Parents' Allowance
  • Bereavement Allowance
  • Bereavement Payment

 

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1 Comment To This Article

  • S. O'Carolan posted:

    on 1st November 2011, 13:08:38 - Reply

    Having received a paper forecast recently, before I hit 65, that identified that I had 24/30ths but that I could make that up to 27/30ths by paying for 2008/9/10 (I left UK before April 2008), I phoned DWP and they gave me the new figures (I had missed a deadline for 2008). I didn't have the money but, when I hit 65, I decided to pay it. Now, DWP wouldn't talk to me (because I was past retirement age, I assume) and I had to deal with HMRC. I had just received a notice of payment for the first pension amount and it was obvious that it was based on 27/30ths. However, when I phoned HMRC they refused to tell me which years I owed for. I assumed it was for 2008/9/10 and requested confirmation of the amounts that I had to pay for those years but, in a fit of senility, could only give them the first two years. Saying "well, you must know what years I owe for" didn't help and they refused to give me the information over the phone. I don't understand. Aren't they obliiged to tell you how they have calculated what you are entitled to and what any shortfall is? Having confirmed my identity they know that they are talking to me.