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?
- What is national insurance?
- Who pays national insurance contributions?
- Do I need to pay national insurance if I do not work?
- Your national insurance number
- Who uses your NI number?
- How to get an NI number
- Evidence of identity interview
- If you don’t have any official documents
- National insurance rates
- UK national insurance authority
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
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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.
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?
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.
Who uses your NI number?
The only people you should ever give your NI number to are:
- any Jobcentre Plus, if you claim jobseeker’s allowance
- your local council, if you access housing benefit.
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.
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