אתר ביטוח לאומי (NIC) is the key to entitlement to certain state benefits. It is paid by employees, self-employed people and employers on earnings. It can also be paid voluntarily to fill in gaps in contributions and protect existing benefits.
An individual’s NIC record is identified by a unique number made up of two letters and six digits. This number never changes.
Information about National Insurance
National Insurance is a system in the UK that collects taxes from employees to fund state benefits. It’s similar to the FICA system in the US, which funds Social Security and Medicare.
NI contributions are divided into different classes. Class 1 NICs paid by an employee are credited to their NI account, and contribute to their future state pension entitlement. Class 2 NICs are paid by employers at a flat rate each week, and are not credited to an employee’s NI account. Class 4 NICs are payable by self-employed individuals, and are calculated based on the level of their taxable profits.
If you’re a full-time employee, NI contributions are taken automatically from your wages, and you can see them on your payslip. You can also pay voluntarily if you want to boost your future state pension.
The government website provides a range of information about the system. It also has details about how to claim a benefit, and an FAQ section. In addition, the site includes a tool to check whether you have gaps in your NI record. Gaps can occur if you’re unable to work due to illness, caring for someone, or other reasons. The gaps can then be filled with voluntary NIC payments. However, the gap will still be deducted from your future State Pension.
How to apply for a National Insurance number
A National Insurance number (NINO) is a unique identifier for people who live or work in the UK. It records your National Insurance contributions over the years and entitles you to certain benefits, including the State Pension.
If you’re employed, your employer will deduct National Insurance contributions from your wages each week and pay them to HMRC on your behalf. You will normally receive your NI number just before you turn 16 and it will stay the same for your whole life. You’ll need to know it when you apply for jobs, as your employer will ask for it. You also need it when you contact HMRC about tax, benefits and other matters.
You can check your NI number online through the Personal Tax Account (PTA) or by using the HMRC app. You can also get a letter confirming your NI number by visiting a local HMRC office or ringing the National Insurance helpline.
Different people pay different kinds of National Insurance, known as ‘classes’. Employed people usually pay class 1 employee’s NI on a payment-by-payment basis, but self-employed people pay both class 2 contributions at a flat weekly rate and class 4 contributions annually based on their level of taxable profits. People who are unemployed or caring for someone may be able to top up their NI record with credits.
How to pay National Insurance contributions
National Insurance contributions are paid by employees (under the pay-as-you-earn system) and self-employed people to HM Revenue and Customs (HMRC). They are made from earnings above a certain threshold – known as the lower earnings limit – with employers deducting contributions from their employees’ wages. Self-employed people pay contributions themselves from their profit. These contributions qualify individuals for certain state benefits, including the State Pension.
People who have gaps in their NI record (for example, years spent unemployed or caring for children) might consider paying voluntary Class 3 contributions to fill those gaps and boost their future State Pension entitlement. However, they should check their State Pension forecast first to see whether this would be worthwhile for them.
If an individual is meant to be making NI payments but doesn’t do so, HMRC will contact them by letter explaining why they are late and how to pay up. This is often referred to as a ‘deficit notice’.
A recent change in the State Pension system means that individuals who leave the UK may wish to consider paying NIC on a voluntary basis before they move abroad. This is to protect their right to a UK-based State Pension. It can also be a cheaper alternative to paying Class 2 NIC for people who spend a lot of time working abroad.
How to claim a National Insurance benefit
If you’re self-employed, it’s important to pay National Insurance contributions. This is a tax on your profits that helps build up entitlement to certain benefits, such as the State Pension and Maternity Allowance. You may also be able to claim certain sickness benefits and a cash benefit for widows and widowers.
You pay Class 1 National Insurance contributions through a PAYE system – your employer deducts this from your wages before paying you and your payslip shows your NIC contributions. If you are self-employed, you pay Class 2 and Class 4 National Insurance contributions depending on your profits through Self Assessment. You can also make voluntary National Insurance payments.
It’s important to note that the new State Pension only applies to people who reached State Pension age on or after 6 April 2016. You’ll need 35 years of qualifying NI payments or credits to get your full State Pension. If you don’t have this many, you can pay Class 3 voluntary contributions to fill in gaps and boost your State Pension.
You’ll need to provide a number of documents to claim your benefit, such as a letter from HM Revenue and Customs with your National Insurance number on it or bank statements showing you have paid Class 2 or Class 4 National Insurance contributions by direct debit. You’ll also need a birth certificate or passport (with your current address written on it) and a marriage or civil partnership certificate or Decree Absolute (for divorced women).