A Guide to National Insurance

A Guide to National Insurance

What is National Insurance?

National Insurance is a form of tax which applies to your earnings for every pay period. This could be weekly or monthly according to your employer’s payment arrangements. It will be deducted from your wages along with Income Tax. If you are self-employed, you have to complete a Self Assessment tax return before paying both Income Tax and National Insurance Contributions. You must pay NIC if you are over 16 years old and in employment earning over £162 a week, or self-employment with a profit above £6,205 a year. You stop paying when you reach the State Pension age. If you don’t pay National Insurance contributions, you will not qualify to receive certain benefits. These include the State Pension, Jobseeker’s Allowance, Employment and Support Allowance, Maternity Allowance, and Bereavement Support. You need an NI number to pay.

How to Find Your National Insurance Number

The Department for Work and Pensions (DWP) sets a unique National Insurance number for every eligible citizen. It is made up of two letters, then six numbers, then a final letter. You only get one NI number which you will have to use all your life. The UK government uses this number to identify you and track your taxes. You will need to provide it to gain employment, claim benefits from the government or your local council, register to vote, apply for student loans, or open a personal pension or an ISA. This is why it is important to memorize your NI number, or at least keep a record of it. You should not share it with other people to protect yourself from identity fraud. If you turned 16 before July 2011, you should have a physical National Insurance card. Otherwise, you’ll have a letter from HMRC stating your number. It will also be on any other letters you receive about tax, pensions, or benefits, as well as on your payslip or P60. If you have an online personal tax account, you can log in and find your number in the National Insurance section. You must apply for an NI number if you didn’t receive one or you move to the UK.

National Insurance Card

Normally, HMRC will inform individuals of their National Insurance number through the post before their 16th birthday. You should have received your number when you were around 15 years and 9 months old. Previously, HMRC would send out plastic cards like the image below with the individual’s National Insurance number on it. To cut costs and save the Treasury almost £1 million a year, HMRC does not provide them anymore. They phased National Insurance cards out of production in 2010 – 2011. Instead, individuals now only receive a letter stating their National Insurance number. You can no longer request a replacement National Insurance card if you lose yours. The card is not proof of your identity, so you don’t need to worry about not having one. All that you need to have is the number itself. Most people memorize their National Insurance number so they have no need for carrying the card, anyway.

A Guide to National Insurance

Lost National Insurance Number

If you did not receive your National Insurance letter at 16, you need to contact the DWP and HMRC. You must also contact them to apply for a number if you are becoming a UK resident for work or studying. This is not the same as already having a National Insurance number but losing it. If you know that you definitely have a National Insurance number but you don’t remember it, and you can’t find it anywhere listed above, then you will need to contact HMRC to recover it. You can call the helpline to ask for it and they will send a letter in the post within 15 working days. For security reasons, they won’t tell you the number over the phone. You can also request a copy of your National Insurance letter by post if you fill out and print the CA5403 forms. They may need you to send copies of documents to prove your identity. If you request it over the phone, they will also ask questions to identify you before sending your NI number.

Check National Insurance Contributions

The amount of National Insurance contributions you should be paying depends on how much you earn and whether you work for an employer or yourself. Employees between 16 years old and State Pension age will pay Class 1 National Insurance contributions, taken automatically from their pay. This will be 12% of your earnings if you earn £702 – £3863 a month, or 2% if you earn more than that each month. Self-employed people will pay Class 2 (if earning more than £6,205 a year) or Class 4 contributions (if earning more than £8,424 a year). You can also make Class 3 “voluntary” contributions if you are eligible to fill out gaps in your National Insurance record. HMRC keeps a record of everyone’s National Insurance contributions to make sure they have enough to qualify for the State Pension or benefits they want to claim. You can check your record online if you have a personal tax account (you can register for one if you don’t). Alternatively, you can phone HMRC or fill out an online form to request a printed National Insurance statement. Or request a copy of your record via post by writing to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1AN.

National Insurance Credits

National Insurance credits can help you to fill gaps in your record if you were unable to pay during these periods of time. You may not be paying your National Insurance contributions due to unemployment or illness, especially if you are claiming benefits because of this. If you are eligible for National Insurance credits you might get them automatically, or you might have to apply. You will either get Class 1 credits or Class 3 credits. Class 3 credits only count towards your State Pension, while Class 1 go towards the other benefits too. If you are on particular benefits, you will receive the appropriate National Insurance credits automatically. These benefits are for unemployment, illness, disability, maternity, and parents or carers. If not, you should contact your local Jobcentre. They can help you to apply for benefits and the associated credits. Alternatively, you can call the National Insurance helpline. You can also write to HMRC at the address above. You should ask about National Insurance credits for certain circumstances. This includes being on jury service or wrongly imprisoned. You can also ask about credits if you’re on a training course or your partner is in the Armed Forces. HMRC will correct your record.