National Insurance is a crucial part of the welfare state. It establishes entitlement to certain state benefits for UK residents.
Contributions are paid by employees and self-employed people on their earnings. They are recorded by HM Revenue and Customs (HMRC) through the PAYE system alongside income tax and other statutory deductions.
Information about NI
National Insurance (NI) is a tax on earnings, which pays for certain state benefits. The money collected is invested in the National Insurance Fund, and around 90% of it is used for retirement pensions. Employees pay NI through a ‘pay-as-you-earn’ system, and the contributions are deducted from their wages. Employees also pay a flat weekly rate, called class 1, and a percentage of their profits, called class 2. Self-employed people usually pay both classes through Self Assessment.
You can find lots of information about NI, including rates and thresholds, on this website. You can even see what your own NI contribution is, and the rate that applied in previous tax years.
HM Revenue and Customs, the UK’s tax authority, collects NI contributions. The authority was previously known as HM Revenue and Customs and HM Customs and Excise.
The NI scheme is an important component of the welfare state in the United Kingdom, and it helps fund a range of social security benefits. You’ll need to pay NI contributions to qualify for some of these benefits, including the State Pension and Maternity Allowance. You can pay voluntary contributions, which are treated as having been paid to protect your NI record, and you can fill gaps in your NI record by making additional payments. This is especially important if you are close to reaching State Pension age.
How to get a NI number
Your NI number is a unique code that ties your NI payments to you specifically. It also lets you build up entitlement to certain social security benefits, such as the State Pension. You can apply for an NI number online if you live in the UK, have the right to work here and want to start working. You can also use it to prove your identity, alongside other documents like passports, biometric residence permits or bank statements. You’ll be asked to submit digital photos of yourself and your documents so make sure you have access to a computer or smartphone with a camera before applying.
If you were born or lived in the UK as a child, you should have been automatically sent an NI number in the letter you get just before your 16th birthday. If you didn’t get one, contact HM Revenue and Customs to find out more.
You can also call the NI application phone line for further help. Note that if you live in Northern Ireland, you can’t apply for an NI number online. Instead, you need to contact a helpline in your area. Occasionally, you might find third-party companies that claim to offer a quicker or easier path to getting your NI number. It’s worth bearing in mind that these are unaffiliated companies charging money for something you can do yourself for free.
How to pay NI contributions
In the UK, individuals pay National Insurance contributions on their earnings. These contributions help fund the country’s social benefits program, including unemployment and state pensions. Employees’ NI contributions are typically deducted by their employers each pay period, but self-employed people must calculate and pay their own Class 2 and Class 4 contributions.
Individuals are classified by a letter of the alphabet (referred to as their NI table letter) based on a number of factors, including their age and earning levels. Each table letter is assigned a specific rate at which the person pays NICs.
Those who want to check their National Insurance record can do so by visiting the government’s website and signing in using their Government Gateway user ID. You can also request a statement for a specific year.
You may notice that some years appear as ‘not full’ on your record, and this is due to the fact that you either paid no NI or didn’t qualify for NI credits that year for any reason. This can include years where you were on maternity leave, in full time education or overseas.
It is possible to make voluntary Class 2 payments – known as ‘top-up’ payments – in order to fill gaps on your record. However, it’s important to seek advice before doing so, as the additional payments will affect your current and future entitlement to a State Pension.
How to claim NI benefits
Millions of pounds go unclaimed each year because people don’t know what they’re entitled to, or are put off by the process. This guide and service, which is also available in Welsh (Cymraeg), aims to make it as simple as possible for you to check what you’re entitled to.
You can check your NI record online, or ask for a statement of your NIC payments (called a ‘NIL’) to be sent to you by calling the NI helpline. You can also apply for a State Pension forecast by contacting the NI helpline.
NI contributions are paid by employees and employers on earnings, and by self-employed people on their profits and certain benefits-in-kind. You can also pay voluntary contributions to fill gaps in your NI record or protect your future entitlement to some benefits. NI contributions are collected by HM Revenue and Customs as part of the PAYE system, along with Income Tax and repayments on Student Loans.
You can claim benefits like State Pension, Disability Living Allowance, Bereavement Benefit and Housing Benefit if you need them. Other benefits you might be able to claim include a Winter Fuel Payment, free travel, and pension credit. If you need to apply for any of these, the Department for Work and Pensions will get in touch with you. You can use the DWP digital Midlife MOT to take stock of your work, health and money with future planning in mind. אתר ביטוח לאומי