National Insurance – Everything you Need to Know

In the United Kingdom, if you are over the age of 16, and you are earning a profit over a certain amount, you will be required to pay National Insurance. Many people might be asking, “What exactly is this National Insurance that I must pay just because I am a United Kingdom citizen?” Well, keep reading to find out more about it and how you can start to pay for it.

National Insurance - Everything you Need to Know

What is National Insurance?

National Insurance is contributions based on a tax on earnings and self-employed profits which ate paid by employees, employers, and people who are self-employed.

They help you build your entitlement towards certain privileges in the country such as State Pension and Maternity Allowance. Determining what you’ll pay solely depends on whether you are self-employed or not.

Some conditions that one must acquire before they are eligible to pay for National Insurance include;

  • One’s employment status.
  • Their age.
  • How much they earn.
  • Where they live.

How do I pay my National Insurance contributions?

In the case that you get paid through a PAYE system, you have nothing to worry about. This is because the National insurance contributions have already been deducted from your salary or wage (depending on how exactly you get paid).

The downside to this payment is that if you do get perhaps a bonus at work, you would be required to pay out of it as well. So, it’s a complete percentage calculation thing.

What types/classes of National Insurance are there?

If you are self-employed your contributions will be calculated based on your Self-Assessment tax return.

How much is National Insurance

When it comes to how much exactly one needs to pay, the calculations can only be done based on what kind of National insurance that person needs to pay.

To know if you qualify or are within the range of those who can pay for National Insurance, a list will be provided showing the different types/classes of National insurance.

They are:

  • Class 1: This is paid by people who are employees and employers.
  • Class 2: This one is paid by those who are self-employed.
  • Class 3: This is a voluntary contribution (You are not really required to pay, just if you feel you need to).
  • Class 4: This is paid if you’re self-employed and have profits over a certain amount.

Class 1

If you are earning over £190 per week, you are required to pay National Insurance contributions.

How is it calculated? You might ask how much you need to pay? Well:

  • If you get a weekly earning of between £190 and £967 you would need to pay 13.25% weekly.
  • If you get paid above £967, then expected to pay 3/25% more.

As of July 2022 though, if you are not earning above £242 per week, you will not be subjected to paying National insurance contributions. This means that until you can start paying income tax, you will not be eligible to pay National insurance.

If you wish to pay a reduced rate out of the National insurance plan, you can apply for the Married Women’s Reduced Rate. You can visit https://www.gov.uk/reduced-national-insurance-married-women to learn more about this and how you can go about it.

When do you stop paying National Insurance?

When you reach pension age/retirement age though, as an employee that is, you stop to pay National Insurance. This is a result of the fact that you no longer receive income from your employer.

If you happen to own a business outside though, that is, you are also self-employed, you will continue to pay National insurance calculated from that source of income.

Class 2

If you happen to be self-employed, the owner of a big business, then you fall under the Class 2 category. This means that your payment is set at a flat rate of £3.15 if you make a profit of £6,725.

However, this class of National Insurance is voluntary for business owners who make below the Small Profit Threshold of £6,725. If you do want to enjoy the benefits that come with this class though, it is advisable to pay for it. Use an accountant to do your books so they can give you guidance on what’s advisable for you.

Class 3

This class is designed to help fill gaps created over the years of you paying your National Insurance. Its sole aim is to improve your chances of getting a higher state pension. You’ll be needing at least 35 years working to qualify for this.

But you can pay for yourself to get it without working that long. This is why it is considered voluntary. If you or anyone who wants it has less than the required number of years, they will receive a reduced state pension.

In this class, the maximum you can pay is £15.85 weekly. And it is only paid on a weekly basis. It changes each year. But you might not be able to pay for this every tax year as it’s not always available. This is why u must find out whether:

  • It is possible to make payments toward any gaps.
  • how much you’ll need to pay in case it is.
  • And if you will be able to benefit from making any voluntary National Insurance contributions.

Class 4

People from the age of 16 and above all fall under this category and you can only pay if you make up to a certain amount of profit as a person who is self-employed. So, unless you are making at least £9,880 yearly, you can’t pay your National Insurance contributions in this category.

This Class of payment makes a yearly profit in the range of £9,800 to £50,270 and is required to pay 9% of it as their National Insurance contribution.

What is a National Insurance Number?

Your national insurance number is given to you to make sure your national insurance contributions are recorded only against your name. It is made up of letters and numbers and it never changes.

Think of it like your number in a register that never changes where if you were stored as the 10the person, till you die you will remain 10th, even if 100 new people come along.

How to find National Insurance Number?

You can find the National Insurance number on either:

  • Your pay slips.
  • Or your P60.
  • or on letters concerning your tax, pension, or benefits.
  • Or even in the National Insurance section of your personal tax account.

What do I Need to Qualify for a National Insurance Number?

Because of how important the National insurance number is, you need to know that only a select people can apply for it and have it. The requirements one must have to secure it include:

  • Residence in the United Kingdom.
  • A work permit or just having the right to work in the United Kingdom.
  • Or that you are currently working, looking for work, or have an offer to start work in the United Kingdom.

If you change your details, whether name, address, or the like, you still do not need to pay for a new National Insurance number.

The above is for people who are probably not citizens of residents of the United Kingdom. It is also for citizens whose families have not helped them file for their National Insurance number already. If you are a citizen, you would be getting your National Insurance number 3 months before your 16th birthday.

This though is only possible if these two conditions are met:

  • You live in the United Kingdom.
  • Your parent or guardian has filled in a Child Benefit claim form for you.

What to do if you didn’t receive my National Insurance Number

If you fit into both criteria and you didn’t get your National Insurance number, you can devise to contact HMRC. To do so visit https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-insurance-numbers

If they didn’t fill out the form for you or apply in your stead, you can do so online.

How to Apply for a National Insurance Number

You will also need to prove your identity before you apply. To do so you’ll need some documents. They include:

  • a passport from any country preferably the UK.
  • Biometric residence permit (BRP).
  • And a national identity card from either an EU country or from Norway, Liechtenstein, or Switzerland.

After you have gotten the documents to visit https://www.apply-national-insurance-number.service.gov.uk/apply/applied-before and follow all the instructions as given.

You can still apply if you don’t have these documents but you will have to do so to prove your identity.

After you have applied, you will be receiving an email from them at National Insurance. The email will let you know if u need to come in to prove your identity.

After about 8 weeks or so you should be receiving your National Insurance number.

How to Find a Lost National Insurance Number

If you lost your national insurance number or you don’t know, what is it anymore, you can easily get it back. The quickest and easiest way to find it is;

Through online means with your personal tax account,

And with a document, you already have, for example, your Pay slip or P60.

You can check out here to know when you will start paying for National Insurance.

Leave a reply

Please enter your comment!
Please enter your name here