National Insurance

2006-10-23

National insurance is an important topic. Read this article to learn more about National Insurance (NI).

Who pays National Insurance?

You pay NICs if you are an employee or self-employed and you are aged 16 and over, providing your earnings are more than a certain level. You stop paying NICs at State Retirement age. This is currently 65 for men and 60 for women but will gradually increase to 65 for women over the period 2010 to 2020.

Your National Insurance number

Your National Insurance number (NI number) is your own personal account number. The number ensures that the National Insurance contributions and the tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.

Who uses your NI number?

The only people you should ever give your NI number to are:

HM Revenue & Customs (HMRC)
your employer
Jobcentre Plus, if you claim Jobseeker's Allowance
your local council, if you claim Housing Benefit

Entitlement to many benefits depends on your National Insurance contribution record (see 'Benefits that depend on NICs' below) so it's very important not to give your number to anyone else.

You will also be required to provide your NI number if you open an Individual Savings Account (ISA).

ISAs – learn more

How to get an NI number

If you don't already have a NI number you must apply for one:

as soon as you start work
as soon as you or your partner claims benefit

To be able to apply you must be:

over 16 years of age
resident in Great Britain (England, Wales or Scotland)

You apply through your local Jobcentre Plus, Jobcentre or social security office who will arrange an interview with you.

If you are a parent or guardian and receiving Child Benefit, any children you care for will automatically get a card showing their NI number just before they reach the age of 16.

National Insurance Rates

The following amounts apply for the 2006-2007 tax year:

If you're employed

if you earn above £97 a week (the 'earnings threshold') and up to £645 per week you pay 11 per cent of this amount as 'Class 1' NICs
you also pay one per cent of earnings above £645 a week as Class 1 NICs
you will pay a lower amount as an employee if you are a member of your employer's contracted out pension scheme

Use this calculator to check NI figures on your payslip (opens new window)

If you're self-employed

you pay 'Class 2' NICs at a flat rate weekly amount of £2.10
you also pay 'Class 4' NICs as a percentage of your taxable profits - you pay eight per cent on annual taxable profits between £5,035 and £33,540 and one per cent on any taxable profit over that amount
if your earnings in the 2006-2007 tax year are expected to be less than £4,465 then you may be entitled to the Small Earnings Exception (SEE), meaning you don't have to pay any Class 2 NICs - you can apply for SEE for the 2006-2007 tax year on form CF10

Benefits that depend on NIC contributions

Your entitlement to the following benefits and/or the amount you can get will depend on your (or in some cases your spouse or civil partner's) NIC contributions:

Contribution based Jobseeker's Allowance (Class 1 NICs only)
Incapacity Benefit (if you can't work for long periods due to illness or injury)
State Pension
additional State Pension (Class 1 NICs only)
Widowed Parents' Allowance
Bereavement Allowance
Bereavement Payment