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What is a National Insurance Number?
You pay National Insurance contributions to build up your entitlement to certain state benefits, including the State Pension. The contributions you pay depend on how much you earn and whether you’re employed or self-employed. You stop paying National Insurance contributions when you reach State Pension age.
Who pays National Insurance?
You pay National Insurance contributions if you’re an employee or self-employed and you’re aged 16 and over, as long as your earnings are more than a certain level. If you’re employed you stop paying National Insurance contributions as soon as you reach State Pension age. If you are self-employed, you stop paying Class 2 contributions as soon as you reach State Pension age and Class 4 contributions from the start of the tax year after the one in which you reach State Pension age.
State Pension age is 65 for men born before 6 April 1959 and 60 for women born before 6 April 1950. But it will gradually increase to 65 for women between 2010 and 2020.
Some people also pay voluntary National Insurance contributions. For example, you might choose to pay them if you:
- aren’t working and are not claiming state benefits
- haven’t paid enough National Insurance contributions in a year to count for the State Pension or other long term state benefits
- live abroad and want to maintain your state benefits entitlement
Your National Insurance number is your own personal account number. The number makes sure that the National Insurance contributions and tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.
Every National Insurance number is different. It’s made up of letters and numbers like this:
QQ 12 34 56 A.
Your National Insurance number never changes even if you go abroad, marry, register as a civil partner, change your name, etc.
Your entitlement to many state benefits depends on your National Insurance contribution record
If you don’t have a National Insurance number, you can apply to get one.
Applying for a National Insurance number
Phone Jobcentre Plus on 0845 600 0643 – lines open 8.00 am to 6.00 pm Monday to Friday. (The National Insurance number is free, but other unofficial websites may charge you if you apply through them.)
Who uses your National Insurance number?
You will have to give your National Insurance number to:
- HM Revenue & Customs (HMRC)
- your employer
- Department for Work and Pensions (which includes Jobcentre Plus and Pension, Disability and Carers Service), if you claim state benefits
- your local council, if you claim Housing Benefit
- the Student Loan Company, if you apply for a student loan
You also have to give your National Insurance number if you open an Individual Savings Account (ISA).
It’s very important you keep your number safe and don’t give it to anyone who does not need it. This will help prevent identity.
State benefits that depend on National Insurance contributions
Your entitlement to certain state benefits and the amount you can get depends on your National Insurance contributions record. In some cases it depends on your spouse or civil partner’s contributions. These benefits include:
- State Pension
- contribution-based Jobseeker’s Allowance
- Bereavement Allowance
- contribution-based Employment and Support Allowance
How much National Insurance you pay
The amount and type of National Insurance contributions you pay depend on whether you’re employed or self-employed and how much you earn. The rates shown below are for the 2011-12 tax year.
If you’re employed
If you’re employed you pay Class 1 National Insurance contributions. The rates are:
- if you earn more than £139 a week and up to £817 a week, you pay 12 per cent of the amount you earn between £139 and £817
- if you earn more than £817 a week, you also pay 2 per cent of all your earnings over £817
You pay a lower rate if you’re a member of your employer’s contracted-out pension scheme.
Your contributions are deducted from your wages by your employer.
If you’re self-employed
If you’re self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:
- Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week
- Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits – 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount
If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.
From April 2011, your Class 2 National Insurance contributions payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.
You pay Class 4 National Insurance contributions when you pay your Income Tax.
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Voluntary National Insurance contributions
You can pay voluntary contributions (usually Class 3 National Insurance contributions) at a flat rate of £12.60 a week.
Class 3 voluntary contributions are paid either monthly by Direct Debit or by quarterly bill. But if you have gaps in your National Insurance contributions record you can make one-off payments of voluntary contributions to fill these.
Other National Insurance contributions rates
There are other rates that apply in certain cases. Examples of these are:
- the married women’s – and widows’ – reduced rate
- the special rate for share fishermen
- the special rate for volunteer development workers
National Insurance and Income Tax
If you have to pay National Insurance you normally have to pay Income Tax too. Income Tax is a tax on your ‘taxable income’ over a certain amount. It’s payable at different rates depending on your income. There are some allowances and reliefs available that can lower your Income Tax bill.
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