.jpg "login"){kind=small}
.jpg)
UK National Insurance Contributions
UK National Insurance Contributions
The UK National Insurance (NI) is a system of taxes and related social security benefits.
- The taxes, defined as National Insurance Contributions (NICs), are paid by employees and employers on earnings and benefits-in-kind; and by the self-employed on their profits
- The benefits include a number of contributory benefits that are provided to participants upon death, retirement, unemployment, maternity and disability
National Insurance for UK residents working in the UK
If you are employed or self-employed and between 16 and 65 (60 for women), you are liable to pay National Insurance contributions.
How much you pay in NIC depends on how much you earn and on the class of your contributions. There are six classes:
| Class 1 | Paid by employees and their employers. They are deducted from their gross wages by the employer, with no action required by the employee |
| Class 1A | Paid by employers for benefits such as a car and fuel provided to directors and some employees |
| Class 1B | Paid by employers who enter into a Pay As You Earn (PAYE) Settlement Agreement (PSA) with HM Revenue & Customs for tax purposes |
| Class 2 | Paid by the self-employed either monthly or quarterly, but based on fixed weekly amounts. They are due regardless of trading profits or losses |
| Class 3 | Voluntary contributions by people not working or with a too low income or working abroad to safeguard or improve benefit entitlement for Basic State Pension and Bereavement Benefits |
| Class 4 | Paid by self-employed people as a portion of their profits |
National Insurance for UK residents working abroad
UK residents may have to or want to continue paying National Insurance Contributions when they work abroad to be able to remain in the UK's social security system. If you are a UK resident and you continue with your NI contributions whilst working abroad, you can get from HMRC a form entitled 101 or 102 that needs to be filled in to be exempt from paying social charges in the European Economic Area (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Malta, Lithuania, Luxembourg, The Netherlands, Norway, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden and Switzerland) until the certificate expires.
Similar rules apply to the Social Security Agreement Countries, including Barbados, Bermuda, Canada, Israel, Jamaica, Japan, Jersey and Guernsey, Korea, Mauritius, Philippines, Turkey, United States of America and former Yugoslavia (not including Slovenia). If you come from the UK with an appropriate certificate, you will be exempt from social charges until the certificate expires.
National Insurance for people coming to the UK
Normally, when you come to work in the UK you have to register for a National Insurance number and immediately start paying National Insurance contributions in the UK on the same basis as other people who normally live and work in the country.
There are special rules if you are coming to the UK from the European Economic area, comprising of Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Malta, Lithuania, Luxembourg, The Netherlands, Norway, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden and Switzerland. If you have a certficate E101 or E102 documenting that you are already paying social security in these countries, you are exempt from National Insurance until the certificate expires.
Similar rules apply to the Social Security Agreement Countries, including Barbados, Bermuda, Canada, Israel, Jamaica, Japan, Jersey and Guernsey, Korea, Mauritius, Philippines, Turkey, United States of America and former Yugoslavia (not including Slovenia). If you come to the UK with an appropriate certificate from one of these countries, you will be exempt from National Insurance until the certificate expires.
Click here for more information from the pages of HM Reveue & Customs National Insurance Contributions.
Printer-friendly version
