© Chartered Institute of Taxation 2019

What is National Insurance?

In the UK, in addition to income tax, you pay National Insurance contributions (NIC) on your earnings above a certain threshold. NIC are credited to your personal National Insurance record, and count towards the UK state pension and state benefits, which you might receive in future — for example, if you are ill and cannot work.

You start paying NIC at age 16 and stop paying them when you reach UK state pension age.

This factsheet provides basic information on National Insurance (social security). It aims to help low income people who would like to come to the UK, or who have already arrived, to understand more about the UK tax system. You should also read the factsheets about Leaving the UK and Employment and Self-employment. This can be found at www.litrg.org.uk/tax-guides/migrants/guides-and-factsheets.

National Insurance number (NINO)

You normally need a NINO in order to be able to work in the UK. Each person is given their own number.

It is made up of letters and numbers, and will look like this: QQ 12 34 56 A. You must never use

someone else’s NINO.

Your NINO makes sure that the NIC you pay are credited to your account. It is also used as a reference in the UK tax system, for example, for Pay As You Earn.

You may have to give your NINO to HM Revenue & Customs (HMRC), your employer, the Department for Work and Pensions, your local council or the Student Loans Company.

How to apply for a NINO

The Department for Work and Pensions (or the Department for Social Development in Northern Ireland) give out NINOs.

To apply for a NINO, telephone Jobcentre Plus on 0800 141 2075 (in England, Scotland or Wales) (textphone 0800 141 2438). If you live in Northern Ireland contact your nearest NINO processing centre (Belfast: 028 9013 8286; Portadown: 028 3877 3046; Lisnagelvin: 028 7185 5407 and 028 7185 5406).

You may have to go to an ‘evidence of identity’ interview with your passport and other proof of identity documents. If successful, you will be sent a NINO after the interview.

You can find out more about applying for a NINO on GOV.UK: www.gov.uk/national-insurance or the NIdirect website: www.nidirect.gov.uk/articles/apply-national-insurance-number

By following those links, you can also find information on what to do if you have had a NINO in the past, but have now forgotten or lost it.

LITRG is an initiative of the Chartered Institute of Taxation, registered as a charity number 1037771

30 Monck Street, Whitehall, London, SW1P 2AP

© Chartered Institute of Taxation 2019

National Insurance for the employed

When you get a job with an employer, you have to give your employer your NINO. If you have not got one, you will have to show that you have applied for one.

Your employer will take NIC off your wages and pay them to HMRC on your behalf. These are known as ‘Class 1 employee contributions’ or ‘primary’ contributions.

If you earn less than £166 a week you will not have to pay any contributions. You are credited with entitlement to benefits if you earn between £118 and £166 a week, even though you do not pay any contributions.

The rate for employees is 12% for earnings over £166 a week up to £962. If you earn more than £962 in a week, the employee rate on the part of your income over £962 is 2%.

Your employer may also pay additional NIC, called ‘secondary’ or ‘Class 1 employer contributions’; these will not be deducted from your wages (they are funded by your employer) but may be shown on your payslip. Your employer may also need to pay Class 1A and Class 1B contributions on benefits they give you.

National Insurance for the self-employed

If you are self-employed, you are responsible for paying your own NIC direct to HMRC (along with your income tax).

You have to pay two kinds of NIC:

A fixed weekly amount which enables self-employed people to build entitlement to state benefits. These are ‘Class 2 contributions’ – £3.00 a week in 2019/20. You can pay them together with your Self Assessment income tax liability, or you can spread the payments over the tax year. If your earnings are below £6,365 in 2019/20, you may not have to pay Class 2 contributions, because your earnings are below the small profits threshold. However, you can choose to pay Class 2 NIC voluntarily in order to help you qualify for various state benefits including the state pension.

An amount calculated in your tax return, based on the level of your annual profits. These are ‘Class 4 contributions’. You pay the contributions when you pay your income tax. If your annual profits are below £8,632 in 2019/20 you will not have to pay Class 4 contributions; if they are between £8,632 and £50,000 you will pay at the rate of 9% and you will pay at 2% on anything over £50,000. They do not count towards any state benefits.

Find out more at: www.gov.uk/national-insurance/overview.

LITRG is an initiative of the Chartered Institute of Taxation, registered as a charity number 1037771

30 Monck Street, Whitehall, London, SW1P 2AP

This factsheet is intended to provide general information only and does not constitute advice. Before taking any action, you should get appropriate immigration, benefit or tax advice from a professional adviser which is based on your particular circumstances. We have done our best to ensure that the information in this factsheet is up to date as of April 2019. You can read our full disclaimer on our website: www.litrg.org.uk/legal.

© Chartered Institute of Taxation 2019

Special Cases

Posted workers

If you are posted by your employer into the UK from the EEA and Switzerland or a country with which the UK has a social security agreement, you may not have to to pay NIC. For a list of the countries with which the UK has a social security agreement, go to GOV.UK: www.gov.uk/national-insurance-if-you-go-abroad.

Instead you may continue to pay social security in the country where you were previously employed. This can also apply if you are normally self-employed in the other country but temporarily carrying out your activities in the UK.

If you have been posted to the UK from a country with which the UK does not have a social security agreement, you may not have to pay UK NIC for up to 52 weeks, if you meet certain conditions. There is more information on the LITRG website at www.litrg.org.uk/tax-guides/migrants/national-insurance-migrants/what-if-i-come-country-no-social-security.

Students

If you are aged 16 or over and you work in the UK while you are a student, you may have to pay NIC – there are no special rules.

National Insurance credits

If you are not paying National Insurance contributions, for example because you cannot work due to illness or if you are a carer, you might be credited with ‘National Insurance credits’. This means that your National Insurance record is credited with NIC during this period, even though you do not actually pay any contributions yourself. Find out more at: www.gov.uk/national-insurance-credits.

LITRG is an initiative of the Chartered Institute of Taxation, registered as a charity number 1037771

30 Monck Street, Whitehall, London, SW1P 2AP

This factsheet is intended to provide general information only and does not constitute advice. Before taking any action, you should get appropriate immigration, benefit or tax advice from a professional adviser which is based on your particular circumstances. We have done our best to ensure that the information in this factsheet is up to date as of April 2019. You can read our full disclaimer on our website: www.litrg.org.uk/legal.

© Chartered Institute of Taxation 2019

More information

You can find out more detail about some of the topics in this factsheet on our website: www.litrg.org.uk/tax-guides/migrants/national-insurance-migrants.

For more information on social security if you are posted to the UK from overseas, go to HMRC’s guidance, RDR1, section 11: www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability.

Getting help with your tax

You can find out where to get help with your tax situation at www.litrg.org.uk/getting-help.

LITRG is an initiative of the Chartered Institute of Taxation, registered as a charity number 1037771

30 Monck Street, Whitehall, London, SW1P 2AP

This factsheet is intended to provide general information only and does not constitute advice. Before taking any action, you should get appropriate immigration, benefit or tax advice from a professional adviser which is based on your particular circumstances. We have done our best to ensure that the information in this factsheet is up to date as of April 2019. You can read our full disclaimer on our website: www.litrg.org.uk/legal.

National Insurance when you leave the UK

If you intend to claim a UK state pension or to return to live in the UK in the future, you need to decide, if you are eligible, whether or not you want to continue to pay UK NIC while you are overseas to maintain your contributions record.

You may be able to pay voluntary NIC provided you either lived in the UK for a continuous three year period or you paid NIC for three years before you went overseas. For more information, visit GOV.UK: www.gov.uk/national-insurance-if-you-go-abroad. In particular, you may find the booklet ‘NI38 Social Security Abroad’ useful: www.gov.uk/government/publications/social-security-abroad-ni38.

You cannot typically claim a refund of NIC paid in the UK, unless you paid them in error. However, they may count in terms of deciding your entitlement to some social security benefits in the country that you are going to. This is called the ‘aggregation principle’, which essentially allows you to combine your periods of overseas contributions with your periods of UK social security contributions in order to meet the requirements as to whether or not the minimum number of years' contributions are met to be entitled to that benefit. The contributions themselves are not transferred from one country to another.

You can find out more about social security benefits within the EEA on the EU website: http://europa.eu/youreurope/citizens/work/social-security-forms/index_en.htm.

Similar aggregation rules may apply if you go to a country with a social security agreement with the UK. For a list of countries that have a social security agreement with the UK, visit GOV.UK: www.gov.uk/claim-benefits-abroad/where-you-can-claim-benefits.

Claiming a state pension if you leave the UK

Provided you have paid enough NIC into the UK system, you should be able to claim a UK state pension, even if you are no longer living in the UK. You need 35 qualifying years of NIC to get the full state pension, but you should be able to get a pro rata amount if you have at least 10 qualifying years. See above regarding the aggregation principle where the 10-year minimum is not met.

We have more information about claiming the state pension if you are a migrant worker on our website at: www.litrg.org.uk/tax-guides/migrants/national-insurance-migrants/national-insurance-and-uk-state-pension.

You might also find this Parliamentary briefing useful – it looks at the current framework in relation to the state pension and foreign nationals and then looks at what might happen in the future, following the vote in the UK EU Referendum: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7894.