What happens if I do not pay national insurance in UK

What happens if I do not pay National Insurance in the UK?

Comments1 comment

What happens if you do not pay National Insurance in the UK? This article answers that question plus all the information you need to decide if you should pay national insurance contributions or not.

If you're living and working in the UK, the type and level of national insurance you pay depends on how much you earn and whether you are classed as an employed or a self employed worker. This guide explains who needs to register and pay UK national insurance, and what happens if you don't pay national insurance in the UK.

This guide covers topics such as:

What happens if I do not pay national insurance?

If you do not pay your national insurance contributions on time you can expect to be fined. You will be penalised by the HM Revenue and Customs (HMRC) for not making payments towards monthly, quarterly or annual PAYE UK taxes, Class 1 National Insurance contributions (NICs), the Construction Industry Scheme (CIS) or student loans. For a full list click here.

If you don't pay national insurance you will typically receive a Notice of Penalty Assessment, after which you have 30 days to pay the penalty. The HMRC will inform you in detail of the missed payment and penalty, how to pay it and what to do if you wish to appeal the decision.

Your notification letter will include a unique ID for each individual penalty. It is best to pay your penalty early, as daily interest will accrue on any unpaid amounts after the due date. If you don't pay the amount in full by six months, you’ll be charged 5 percent extra on unpaid amounts. This increases to 5 percent after 12 months if payments remain unsettled. Penalties are charged for both end of year adjustments and amounts due annually or occasionally.

Grounds for appeal include incorrect data on the tax return, death or bereavement, ill health, fire, flood or natural disaster, and theft and crime. If you are an employer and no longer have employees, you may also make an appeal. An appeal can be submitted using the HMRC’s online service or in writing:

HM Revenue and Customs
Southend Debt Management
6th Floor Alexander House
21 Victoria Avenue
Southend-on-Sea, Essex
SS99 1AA, England

What is national insurance?

National insurance is a government scheme which requires those who are living and working in the UK to make regular payments towards benefits. These payments are known as National Insurance Contributions (NIC) and the amount you pay depends on how much you earn and whether you're employed or self-employed.

National insurance in UK

Who pays national insurance contributions?


Paying national insurance entitles you to state benefits, which vary depending on whether you’re employed, self-employed, or making voluntary contributions.

You must pay national insurance if you are aged 16 and over and working in the UK, providing your earnings are more than a certain level. If you're employed, NICs are taken automatically from your monthly pay. If you are registered as self-employed, you’ll have to arrange NICs yourself.

Do I need to pay national insurance if I do not work?

You stop paying national insurance in the year you reach the UK retirement age, which varies depending on your birth and gender. Read more on UK pension rules and pension age.

Your national insurance number

Your national insurance number (NI number) acts as your own personal account or tax number, allowing you to track the amount you have contributed and any benefits to which you are entitled. You are legally required to apply for a NI number if you start work in the UK or claim any benefit.

You NI number will include two letters, six numbers and an additional letter, for example AA 000000 Z.

If you have children younger than 16 years living in the UK, each child will be registered for national insurance automatically and will receive a NI number before their 16th birthday. Parents with young children are also entitled to claim UK child benefit.

You will need to supply your NI number to your employer to ensure all the NICs and tax you pay are properly recorded on your account. It also acts as a reference number for accessing any part of social security system, for example, healthcare.

NI number

Who uses your NI number?

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

 
For many benefits, whether you are entitlement depends on your record of national insurance contributions (read which benefits depend on NICs below), so you shouldn't share your number with anyone else.

 You will also be asked to show your NI number when 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 any UK social security benefit.


To apply for an NI number you must be:

  • older than 16 years
  • an official resident in Great Britain (England, Wales or Scotland).


You can apply for a NI number by calling the Jobcentre Plus NI Allocation Service Helpline on 0845 600 0643. They will first check whether you need a number and then arrange for you to undertake an evidence of identity interview.

If you receive child benefits as a parent or guardian, the children you care for will automatically receive a NI card just before reaching 16 years of age.

Evidence of identity interview

This evidence of identity interview is designed to prove that you are not acting under a false identity. The interview will usually be one-to-one (unless, for example, you need an translator). The interview will mostly consist of questions about your background and circumstances.
 You will typically have to fill in an application form and show several forms of identification, such as your passport/identity card, residence permit, birth or adoption certificate, marriage/civil partnership certificate and driving licence.

National insurance in the United Kingdom

If you don’t have any official documents

If you don't have the relevant official documents, you must still apply for a NI number and attend the interview. In some cases, you may be able to prove your identity based on the information you provide during the interview, for example, by referring to people who can confirm facts about you, such as a community group in which you’re actively involved.

National Insurance rates

The HMRC provides information on the latest NIC rates.

Benefits that depend on NI contributions

Your entitlement to several national insurance benefits, as well as the amount you will receive, will depend on your NIC contributions (or in some cases your spouse or civil partner's).

Access to the following benefits depends on NI 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

UK national insurance authority

More information is provided on the government's website and citizens' advice service.

Click to the top of our guide to national insurance in the UK.

 

 

Expatica
Expatica ask the expert
Need advice? Post your question on Expatica's free Ask the Expert service to see if we can help.


Updated 2017.

Comment here on the article, or if you have a suggestion to improve this article, please click here.

If you believe any of the information on this page is incorrect or out-of-date, please let us know. Expatica makes every effort to ensure its articles are as comprehensive, accurate and up-to-date as possible, but we're also grateful for any help! (If you want to contact Expatica for any other reason, please follow the instructions on this website's contact page.)


Captcha Note: Characters are case sensitive
The details you provide on this page will not be used to send any unsolicited e-mail, and will not be sold to a third party. Privacy policy .

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.